Special Report: Liberty and Justice for All

Report on the final draft (June 1986) of the U.S. Catholic Bishops’ Pastoral Letter “Economic Justice for All” by the Lay Commission on Catholic Social Teaching and the U.S. Economy

William E. Simon and Michael Novak, Co-chairmen

This lay commission has studied the final draft of the U.S. Catholic bishops’ letter, “Economic Justice for All: Catholic Social Teaching and the U.S. Economy” (June 1986). We commend our bishops for the improvements introduced since their first draft (November 1984). In our earlier report, Toward the Future, issued before the bishops’ first draft, we raised many of the same questions as the bishops later did. We have been gratified to see how many of the points we raised — particularly concerning the family — have found their way into the bishops’ final draft. We commend the bishops for being attentive to their many critics.

In recent days, the bishops have also released a second, related document — a short, 29-paragraph “Pastoral Message on Economic Justice for All” — intended to accompany the longer, discursive draft as a sort of summary for pastoral use. We highly admire this short “Message.” Thus, our comments below are directed entirely to the long third draft of the Pastoral Letter released last June. (We expect that this long draft will be passed substantially as is, with perhaps some small amendments, at the bishops’ annual meeting later in November.) In the comments below we do not address the short “Message” (except for its brief misstatement of papal teaching on economic rights in paragraph 17, to be discussed below). On the contrary, we find its tone and balance, its non-partisanship and moral transcendence, far superior to the formulations used in the long Pastoral Letter. We have important reservations about some of the passages in the latter, while the short “Message” represents in our eyes the ideal we wish the longer version had met.


So again the bishops have invited all Americans to continue this debate upon economic realities and, in response, we again make public our own reflections. First, we emphasize the positive. Second, we list several flaws still to be found in the long final draft.

1. General Comments

We think it admirable that our bishops placed stress on lifting the poor out of poverty. That is precisely what the Statue of Liberty (“Send me your tired, your poor . . .”) symbolizes. And lifting up the poor is precisely what, generation after generation, the United States has done — and is still doing. All American families, like those first Catholic families that arrived on the Ark and the Dove, have benefited from this national policy.

Lifting the poor out of poverty has also been one of the main pillars of U.S. international policy, at least since Franklin D. Roosevelt and Harry S. Truman articulated the “Four Freedoms.” Lifting up the poor is one of the three liberations for which the liberal society has always. stood: (1) liberation from tyranny and from torture, through democracy; (2) liberation from oppression of conscience, information, and ideas, through free churches, the free press, free intellectual life, and institutional pluralism; and (3) liberation from poverty, through capitalist institutions such as property, markets, enterprise, invention and free associations.

While we have serious concerns that practical recommendations made by the bishops to help the poor of the Third World will end up causing greater poverty and misery, we commend their good intention. Economic policies are judged by their results.

We do not count ourselves among those who think that, in speaking of economics, the bishops are overstepping their proper authority. On the contrary, we take pride in Catholic social teaching. We welcome the bishops’ constructive contributions to that unfinished tradition, even though lay Catholics also have a primary calling to contribute to that tradition.

In some ways, the final draft includes stronger statements in favor of a capitalist economy, such as that of the United States, than are to be found in any other document of the tradition of Catholic social thought. The drafters have mentioned the crucial role of creativity and invention, the role of enterprise, the importance of economic growth and job creation and other institutions of the free society. For this we commend them.

In a few places, we fear that the bishops have neglected or obscured basic practical points, and have exhibited several practical confusions that are likely to lead to results that they do not intend.

We also have some concern that the bishops have in a few places gone beyond the bounds of their authority in two respects. First, in some passages they have risked making prescriptions that belong more properly to lay authorities and public democratic choice. They thus risk cloaking their political and social opinions on concrete matters with ecclesiastical authority. Second, in some passages they have risked placing their moral authority behind practical economic policies whose unintended consequences, if errant and evil, can bring their genuine religious authority into disrepute. To the extent that they take sides on partisan issues, in matters not specifically entrusted to their care, they forfeit the moral authority of a position beyond partisan politics. Large sections of the final draft are properly sheltered from these faults. But no one can deny — either those who applaud or those who object — that some passages are both excessively concrete and excessively opinionated.

In the short pastoral “Message” mentioned above, for example, the bishops clearly state that their long final draft goes into specifics and into concrete applications, not in order to insist that theirs is the only or the correct interpretation, but in order to “give an example” of how to move from general principles to concrete judgments. They write that they expect persons of good will to disagree about such matters, and they encourage them to do so. We accept this invitation to disagree. We are also constrained to say that the final draft’s way of reasoning from general principles to concrete judgments does not set a good example. The final draft includes many hidden and partisan “middle axioms,” ideas that mediate between general principles and matters of fact. The short pastoral “Message” states clearly that the bishops do not intend to be ideological. But in bridging general principles with specific applications, the reasoning of the final draft is in places unmistakably ideological. It is far more so, apparently, than the bishops intended to be. This is, of course, most obvious to those who do not share that ideology.

A great many of the deficiencies that concern us are to be found in Chapter 3 of their letter, “Selected Economic Policy Issues.” Others are to be found in Chapter 2, section B, “Ethical Norms for Economic Life” and in Chapter 4, “A New American Experiment.” These areas, in particular, belong especially to the vocation of lay persons. On these temporal matters, we judge that lay persons have specific responsibilities to accept the invitation by our bishops to enter fully into the national debate.

We share with our bishops the full intention of raising up every single poor person on earth from the tyranny of poverty. The dream of democratic and capitalist societies such as our own will not be fulfilled until there is a solid economic base placed under every single person on this planet, and until the reality of “liberty and justice for all” rings out around this planet from every sea to every shining sea.

We fear, though, that in this universal vision the bishops underestimate the role of liberty. Even the title of their letter, “Economic Justice for All,” leaves out the crucial element of social justice, liberty. Liberty is the ground of responsibility, and hence of human dignity. “Liberty” — in its distinctive American meaning of “liberty under law” and “under God” — is the distinctive American gift to the social teaching of the Church. Indeed, the ideal of liberty now belongs to the vision of all peoples everywhere. Today, in both the socialist and the traditionalist world, more and more nations are grasping the central role of political liberty, and moving toward democracy; of freedom of conscience, inquiry, and speech, and moving toward “openness”; and of free economic institutions, and moving toward free economic activism, property rights, markets, incentives, and invention.

In de-emphasizing liberty — preferring “Solidarity” — we think the U.S. bishops have missed a precious historical opportunity. They have misread “the signs of the times. – In this respect, we believe that the recent Vatican Instruction on “Christian Freedom and Liberation” has been more penetrating than the final draft.

Nonetheless, we praise the U.S. Catholic bishops both for opening up this crucial argument of our times and for proceeding in an open way, inviting us, and all who disagree with their own analysis in its various parts, to enter openly into public debate in charity and in civility.

The Catholic bishops of the United States affirmed at the Third Council of Baltimore (1884) that the Founders of the United States, under Providence, “built better than they knew.” The Catholic bishops of the present generation have now opened up questions larger and deeper than they themselves have plumbed. They have invited all citizens to go beyond their own final draft. Forming our own free association — in a distinctively American fashion — the members of our Lay Commission gladly accept this challenge. We thank our bishops for encouraging our work.

2. Serious Faults in the Bishops’ Final Draft

Despite the many improvements that the bishops have made in their letter since 1984, we still find in the final draft several serious intellectual defects. Among these are: a failure to grasp what makes poor nations into developed nations; deficient understandings of political economy (the relative roles of government and the free economy); excessive trust in the state and its officials; an inadequate grasp of crucial concepts such as enterprise, markets, and profits; significant confusions about economic rights; fateful confusions between defense spending and spending on weapons; a preference for “solidarity” over pluralism; and an inadequate exposition of “liberty.” Because of such deficiencies, the final draft fails to grasp the distinctive nature of the American experiment in political economy. Its descriptions of poverty, welfare, unemployment, and taxation in the United States remain significantly one-sided. And the final draft still remains blind to moral and spiritual resources available in American economic habits and institutions, thus failing to give the moral guidance that many citizens long for.

We hope and pray that in a future effort the bishops will go more deeply into these themes, and not cut short a flawed beginning. We also hope and pray that they will instruct teachers in Catholic schools, pastors and others, to be open to the full range of debate upon these issues, guarding themselves faithfully against partisan or one-sided treatment of important dimensions of reality. We do not argue that there is only one set of reasonable views upon these much- disputed issues. We do hold, with the bishops, that full pluralism and openness of discussion should prevail.

We note with regret that the avoidance of partisanship did not always mark the dissemination of their earlier pastoral letter on nuclear arms. We hope that on this issue the dissemination process will go much better, in fuller pluralism and non-partisan inquiry.

We turn now to areas in which, in our judgment, the final draft falls short.

(1) Raising up the poor in the Third World. The letter of the U.S. bishops is being studied closely by Catholic bishops in the Third World. In Latin America, in Africa, and in the Philippines, South Korea, and other nations in Asia, the Catholic people represent a significant cultural force. The economy in most such places is still characterized by residual practices of the feudal era, traditional ways of thinking, and pre-capitalist institutions. Very few facilities exist for empowering the poor: enabling them to incorporate small businesses, to avail themselves of credit, and to enter markets freely. Many markets are restricted through public licenses available only to the privileged and the well- established, and the poor are in many effective ways prevented from engaging in economic activism.

Consider Latin America. Throughout that resource- rich continent, there are between 60 and 70 million young persons, already born, under the age of fifteen. Every year between now and the year 2000, these youngsters will begin entering the job market. Already facing massive unemployment and underemployment, Latin America will have to create between 60 and 70 million additional new jobs in order to employ these youngsters. How will these jobs be created? It seems unlikely that, by the year 2000, a higher number of persons will be employed in agriculture. Neither large domestic corporations nor transnationals are likely to be able to employ more than a tiny fraction of the unemployed. Clearly, Latin America needs 10 to 15 million new small businesses, both industrial and commercial, each hiring 5-10 persons, to absorb this massive labor force. But how will these new enterprises be created?

In most nations, the process of incorporating and licensing new businesses is lengthy and very costly. The law favors the already privileged. Law, custom, and the prevailing cultural ethos are in many places hostile to enterprise. This is a massive roadblock to the economic aspirations of the poor.

Experience shows that God gives abundant economic talents to the poor, and that, where the law and institutions favor enterprise, the poor can in massive numbers and in a short time exit from poverty, through the use of their God- given talents. Each person, Christians believe, is made in the image of the Creator. Each is capable of economic creativity. Thus, nations such as Japan, South Korea, Hong Kong, Taiwan, and Singapore have grown spectacularly since the ravages of World War II, multiplying their per capita income 10 to 15 times during a single generation. The pastoral letter of the U.S. bishops fails both to point out these universal possibilities and to encourage the necessary institutional reforms.

In practical terms, the pastoral letter offers the poor of the Third World very little hope. The pastoral letter emphasizes foreign aid, without pointing out that foreign aid often helps the poor very little, is often mishandled by elites, and does little to empower the poorest. It also fails to point out that if the billions of dollars already expended in aid — and the further hundreds of billions of dollars expended in loans — can be misused by elites, then the future promise of further aid is not really very hopeful. In many developing countries, basic institutional changes are needed. Without these basic institutional changes, designed to empower the poor at the bottom of the ladder to become economic activists, the prognosis for the future is not bright. Yet there are many examples in the developing world of peoples that have made spectacular economic progress in a short time. These examples are ignored in the final draft.

This is all the more surprising since most of the economically successful developing nations are pluralistically adapting to their own conditions institutions pioneered in the development of the United States. Except for such institutions, the U.S. today might be as poor as Brazil, Africa, or Asia. Great deposits of natural resources are not sufficient to move a nation to development. Among the institutions crucial for the early development of the United States were: Article I, section 8, of the U.S. Constitution, committing the nation to “promote the progress of science and useful arts” through a patent office, copyrights, and other incentives to inventiveness and discovery; the Homestead Act favoring a multiplicity of owners rather than a few large landholders; the land-grant colleges and the Extension Service; farm credit bureaus; local savings and loan institutions open to all; credit bureaus; cooperatives; assistance to small businesses; a massive commitment to universal education; a habit of association (“base communities”) and ease of incorporation. Without such institutions, the early economic development of the continental U.S.A. can scarcely be imagined.

In Japan, Hong Kong, South Korea, Taiwan, Singapore and elsewhere today there are many examples of successful, rapid economic development, adapting pluralistically to each culture parallel developmental institutions. For examples of success, one need not point only to the U.S. Ideas pioneered in this country have proven to be immensely successful elsewhere, when adapted to local conditions and customs and supplemented by new techniques invented locally. What has characterized economic progress in all of these nations is a vibrant work ethic not eroded by govern-mental encouragement of dependency. This is a moral, as well as an institutional factor.

The experience of the United States in moving from an undeveloped to a developed nation is, therefore, not without significance elsewhere. But the bishops’ final draft gives the founders of the U.S. credit mainly for their experiment in political and civil rights, while failing to grasp the true originality of the American experiment in economic liberty. The founders of our nation launched a “commercial republic,” an experiment in political economy. The economic originality of the American model has been at least as decisive in history as its political originality. The final draft fails to grasp the crucial economic insights of the American experiment.

(2) A preferential option for the state. The final draft can by no means be called a socialist document. It guards against a purely statist approach to helping the poor. It is, clearly, a pro-capitalist document. Nonetheless, in one sentence here and another there, the final draft turns to the state much more often and more quickly than is likely to help.

One should not exaggerate the difference between the bishops and ourselves. The bishops recognize other economic agents besides the state. We recognize important economic roles for the state. But the bishops do tend to lean toward the “political” in political economy, while experience leads us to lean in the opposite direction. In practical matters, which way to lean has decisive effects. The disagreement is an important and abiding one.

The Lay Commission agrees that, in political economy, the political systems plays a significant — but not a central — role. That role, in our judgment, is best described as empowering people. The state ought to permit economic activity to be open, free, legally accessible to all, easy to enter, broadly supported in law. The state ought to reduce barriers preventing the poor and underprivileged from entering markets, exercising their God-given talents, finding ample opportunity to dream their own dreams, and putting their own vision into reality. The state must be active, but excessive state entanglement raises barriers.

To repeat, we are not opposed to an activist state, but wise activism means counting costs as well as benefits. A wise citizenry properly hunts out government programs and activities that erect barriers to and introduce biases against productive activity. For example, welfare programs giving direct payments to individuals may, among their effects, subsidize nonparticipation, raise the cost of working against the cost of not working, raise the cost of employing people, and alter the sense of social responsibility and personal dignity. An unwise tax system may penalize saving and productivity-advancing activities. Actions by the state, while called for by the conception of political economy and often necessary, are not ipso facto good. They must be constantly under review and subject to reform.

Throughout the final draft, by contrast, there is a more sympathetic understanding of political activism than of economic activism. Yet it is chiefly the later that is the engine of economic development. Economic development begins from the bottom up, through empowering the poor, not from the top down through extending political privileges.

To be sure, the final draft takes pains at several places to extol the role of mediating institutions and of social vitalities independent of the state. We applaud such passages. Still, the secret to economic development lies in the economic activism of the poor — in ease of incorporation, in the accessibility of commercial licenses, in the availability of local credit, and in an ethos and legal climate favorable to the talents of the poor. Even a few paragraphs highlighting the centrality of the economic activism of the poor would have dramatic effects in the efforts of the church worldwide to empower the poor, through institutions designed to shake the grip of the privileged upon economic life in most Third World countries.

(3) Dim light on enterprise, markets, and profits. The final draft speaks far too briefly about enterprise, spends more time attacking the straw man of “unfettered markets” than in grasping the importance to the poor of easy and rapid entry into markets, and describes profits as a “vexing problem.”

In fact, “profit” is another word for development. It is achieved by those things that produce development: institutions and habits that undergird enterprise, risk-taking, and the sacrifice of current consumption in order to invest in research and future production. If an economic system is drawing no more income out of economic activities than will cover costs, there is no development, only stagnation. The profit motive is a social discipline, measuring whether genuine economic development is being made or not. One of profit’s disciplining effects is to direct capital and other resources into their most creative uses. Economic development is not everything, but for the poor it is crucially important. A stagnant or declining economy offers the poor little hope indeed. That profits should be used wisely and for the common good is an obvious and important moral principle. But without profits, there is no development. Neither the profit motive nor the effort to achieve development is “a vexing problem.” Both are absolutely crucial to the welfare of the poor.

Further, markets cannot exist without commonly accepted rules, regulations, and ethical disciplines. In a crucial sense, there can be no such thing as an “unfettered” market. In the real world, in most traditional countries, the problem is that markets are skewed in favor of the traditionally privileged. Only the privileged can obtain papers of incorporation, licenses, and credit. Market entry is restricted. The poor are effectively excluded. The idea of “free markets” means, not the absence of legal regulation or ethical standards, but rather equal opportunity, open entry, and the legal and institutional support for universal access among all the citizens. Where in Latin America, Africa, or Asia are there “unfettered markets” open to the poor? In few places, indeed. It is one of the chief roles of government in the political economy of democratic capitalism to keep markets open to all. Behind this role lies the fundamental principle: the cause of the wealth of nations is the wit, invention, discovery, and enterprise exercised through economic activism. When one speaks of “free markets,” one does not mean there are no interventions from the political system. Rather, one means such interventions are prudent and confined to cases in which markets are failing or in which market performance can be improved.

Finally, enterprise is not the same as entrepreneurship. Enterprise is a talent and a virtue, a habit of discovering unmet needs and of inventing goods and services not previously available, and a determination to provide goods and services at better prices or with better quality than offered elsewhere. Entrepreneurship arises from the habit of enterprise but adds to it the practical skills involved in actually realizing new ideas. The person of enterprise has the habit of inventing new ideas. The entrepreneur has the further habit of realizing new ideas, under the conditions of ambiguity and contingency prevailing in the real world of fact.

To its credit, the final draft does praise enterprise. But considering the crucial importance of enterprise, the final draft is surprisingly silent about its characteristics, its preconditions, and the methods of encouraging its frequent appearance. Talents of enterprise are widely diffused among the poor. The practical skills necessary to their flowering can be identified. Supporting institutions can be constructed. Among these are institutions permitting rapid and cheap in-corporation; protecting patents and copyrights; and laws favoring capital formation and realistic depreciation schedules, etc.

(4) Economic rights. The final draft (nos. 78-83), much improved beyond the first draft upon this point, still does not properly report the papal teaching upon economic rights. In Pacem in Terris, Pope John XXIII clearly distinguished “economic rights” (nos. 18-22) from “The right to life and a worthy manner of living” (no. 11). Economic rights in papal thought include rights to initiative, to physically and morally healthful working conditions (with special rights for women, wives, and mothers), to opportunity to achieve responsibilities compatible with talents, to work that provides a decent standard of living for one’s family, and to private property and its inherent social duties. Economic rights in papal thought protect the activism of ordinary people, protect families from dependency upon the state, and are consistent with the economic rights carefully defended in the U.S. intellectual tradition. In both, rights to economic liberties are protected, as well as rights to civil liberties.

In papal thought, such “economic rights” are treated quite separately from “welfare rights.” Even the word “rights” appears to have a different meaning in these two separate contexts. Thus, for Pope John XXIII, the right to life includes such “welfare rights” as the right “to means which are necessary and suitable to the proper development of life,” including “the right to security in cases of sickness, inability to work, widowhood, old age, unemployment, or in any other case in which he is deprived of the means of subsistence through no fault of his own” (Pacem in Terris, no. 11; emphasis added). In other words, the individual has the duty to be self-reliant. Concerning the attitude of personal responsibility, Pope John XXIII writes as follows (ibid., no. 34):

The dignity of the human person also requires that every man enjoy the right to act freely and responsibly. For this reason, therefore, in social relations man should exercise his rights, fulfill his obligations and, in the countless forms of collaboration with others, act chiefly on his own responsibility and initiative. This is to be done in such a way that each one acts on his own decision, of set purpose and from a consciousness of his obligation, without being moved by force or pressure brought to bear on him externally. For any human society that is established on relations of force must be regarded as inhuman, inasmuch as the personality of its members is repressed or restricted, when in fact they should be provided with appropriate incentives and means for developing and perfecting themselves.

When an individual through no fault of his own cannot meet essential needs of life, the individual has a right, because of his or her humanity, to help from society. This help is not necessarily to come from the state, but rather from the state only as a last resort, through a social “safety net.” Human beings must help each other. Thus, Pacem in Terris, no. 32: “It is not enough, for example, to acknowledge and respect every man’s right to the means of subsistence if we do not strive to the best of our ability for a sufficient supply of what is necessary for his sustenance.”

In papal teaching, “economic rights” protect citizens in their activism and in their active contributions to society. By contrast, “welfare rights” protect those citizens unable to be active, in their need to receive benefits. The latter need arises only from the inability of some citizens, through no fault of their own, to be self-reliant. Self-reliance is the ideal of papal thought. To protect the truly needy, welfare programs are necessary in any good society. To protect liberty and autonomy, welfare dependency is to be discouraged. That is why “welfare rights” must be treated with caution. As the final draft does observe, Catholic social teaching emphasizes responsibilities as well as rights.

Further, in our highly legalistic society, it is dangerous to speak of rights without exact clarity. Papal teaching does not speak of “constitutional rights” or “legal rights.” It has in mind “rights” binding upon other human beings morally. The institutional mechanisms through which such moral obligations are to be fulfilled are left to each society to work out. Such moral obligations must be met; on that there is unanimity. Still, there are grave dangers in confusing moral rights with constitutional or legal rights.

In the highly legalistic American context, loose speech about “rights” invites massive legal entanglements. If the state were to become paternalistic, it would become (as Tocqueville warned) “a new soft despotism” dangerous to liberty, to self-reliance, to initiative, and to moral autonomy. Theories that loosely invite the intrusion of the state, however benign their intentions, invite this soft tyranny. The state obliged to provide for the daily welfare of all its citizens gains over them exquisite control. (See Appendix.)

Experience shows that many forms of welfare are more efficiently and more morally provided by other agents besides the state. While welfare programs by the state are sometimes necessary, they typically suffer from three defects: they operate by coercion, by abstract regulation and by impersonal methods; they often encourage dependency and discourage personal responsibility; and what they take coercively and efficiently from some they provide without any sense of human contact or human concern to unknown others with unknown effects.

We are very much in favor of a disciplined and realistic welfare state that, while encouraging independence and self- reliance, provides assistance to those who cannot rely on themselves. As we wrote in Toward the Future (p. 58), “One measure of a good society is how well it cares for the weakest and most vulnerable of its members.” In our view, the best intellectual defense of the welfare state scrupulously limits the language of “economic rights” to the rights of activist individuals and their associations. (These include the papally approved “economic rights” to initiative, responsibility, private property, etc.) Such a theory carefully places welfare “rights” in the context of duties of self- reliance, and ascribes them only to those persons unable through no fault of their own to fulfill these duties. In addition, such a theory turns to empirical research in order to discern the most effective means for providing welfare benefits that strengthen habits of self-reliance and personal autonomy. Such a theory notes, with Pope John Paul II, that among those able to work, human dignity is rooted in work. Several passages in the final draft commendably recognize this point.

Thus, we note with regret that — just as we feared — the misstatement of papal teaching in the long draft of June 1986 leads directly to an even balder misstatement in the short pastoral “Message” of October 1986. In paragraph 17 of the latter, the bishops write: “As John XXIII declared, all people have a right to life, food, clothing, shelter, rest, medical care, education, and employment.” But again, Pope John XXIII does not assert this of “all people.” He asserts it only of those who are unable “through no fault of [their] own” to meet their responsibilities to provide for themselves and their dependents (Pacem in Terris, no. 11; emphasis added). Able persons have the duty to be self- reliant. They do not have a “right” to be dependent, unless circumstances beyond their control prevent them from taking responsibility for their own needs. In the same paragraph 17 of the recent bishops’ “Message,” “economic rights” are not properly distinguished from “welfare rights,” as John XXIII did distinguish them (compare Pacem in Terris, nos. 18-22 with no. 11). Further, the different meaning of the word “rights” in the two different phrases, “economic rights” and “welfare rights,” is not observed; the second meaning is conditional. This lapse strengthens our view that errors in the June draft may have unintended effects in the process of dissemination. The latter will have to be very closely watched.

(5) Defense spending vs. spending on arms. More than once, in opposition to curpgift levels of U.S. spending on defense, the final draft confuses the entire defense budget with spending on weapons. Five crucial facts are omitted.

(a) Defense spending includes salaries, pensions, family allowances, the cost of installations and transport, recruiting and training costs, communications and other fixed costs. The United States has no draft and relies upon volunteers. Its total armed forces in 1985 numbered 2.2 million (approximately 2 percent of its total 109 million civilian employees). Current defense spending in 1985 (at $245 billion), represented 6.4 percent of gross national product and 26 percent of the federal budget. This already represents a large decline from 9 percent of GNP and 52 percent of the federal budget in 1960. An investment of 6.4 percent of GNP in the defense of priceless liberty hardly seems excessive.

(b) Actual spending on procurement, including weapons, equipment, communications gear, etc., in 1985 totaled $70 billion, or 29 percent of the total defense budget, about 2 percent of GNP and about 7 percent of the federal budget. Two considerations must be taken into account. Since weapons both wear out and become obsolete, and must be replaced in cycles averaging about fifteen years, spending on arms goes in cycles. There are low years (as during the 1970s) and high years (during the 1980s). But even in the highest years, spending on arms represents only a very small investment in the future of liberty. Second, it would seem to be as imprudent to spend too little as to spend too much, and the measure of prudence is need. In a democracy, the people must weigh that need, in the light of world events. In our own view, because of the imbalance created by vast Soviet spending during the 1970s, our own nation is erring dangerously on the side of an inadequate deterrent. Sufficiency to deter is the minimal measure.

(c) In their pastoral letter on nuclear policy, the U.S. Catholic bishops urged the people of the U.S. to increase spending on conventional defense and to decrease spending on nuclear defense. But spending on conventional arms is currently almost five times higher than spending on nuclear arms. The latter is by far the least costly deterrent. Thus, the Catholic bishops themselves seem to be in favor of higher defense spending. Their advice in the two pastorals in contradictory.

(d) It is true that the U.S. spends a higher proportion of GNP (6.4 percent) on all elements of defense spending than West Germany (about 4.3 percent) and Japan (less than 1 percent). This is because the U.S. has assumed heavy burdens for the defense both of Western Europe and of the free nations of Asia. It may be that the bishops want Western European nations and Japan to raise their own defense spending in order to defend themselves without the help of the United States; but this is unlikely — and it would be unwise and dangerous policy.

(e) The U.S.S.R. maintains military forces as the very center and linchpin of their economy, at between 14 and 16 percent of GNP. Soviet military forces defeated Hitler’s Eastern Armies in 1944, but are now far stronger than Hitler’s military at the height of its power. Soviet naval and air forces now operate in every ocean, off the shores of the U.S., Japan, Sweden, and the small band of other free nations of the planet. Soviet strategic nuclear forces are superior in several respects to the U.S. nuclear deterrent. Soviet strategic anti-ballistic missile defenses already in place protect a vast area of the Russian heartland, whereas those of the U.S. exist only on the drawing boards. The danger of nuclear blackmail is high. If it was not moral for the free nations to show the face of weakness and disarmament to Adolf Hitler during the 1930s, why is it moral to disarm in the face of Soviet power today? Those who cried out “Peace! Peace!” during the 1930s did not deter war. On the contrary, they acquired responsibility for emboldening aggressors. On this point, Walter Lippmann came to regret bitterly his own behavior in the 1930s:

I was too weak-minded to take a stand against the exorbitant folly of the Washington Disarmament Conference. In fact, I followed the fashion, and . . . celebrated the disaster as a triumph and denounced the admirals who dared to protest. Of that episode in my life I am ashamed, all the more so because I had no excuse for not knowing better.

(6) The preference for “solidarity” over “pluralism. Throughout the final draft, appeal is made to “solidarity,” even where “cooperation” would better serve the argument, especially among a pluralistic people. “Solidarity” leaves scant room for dissent, disagreement, and the autonomy of conscience. In European languages, perhaps, “solidarity” may be rooted in experiences of cultural homogeneity. To the American ear, however, solidarity suggests solid ranks in lockstep. The American people are swift to cooperate — one person for his motives, another for hers — but they deeply cherish the dignity and liberty of conscience. They value dissent. They properly fear authoritarianism from any quarter. They recognize international obligations, human brotherhood, cooperation among the nations, and responsibilities beyond borders. In this sense, they recognize that all upon this planet are one family under God. But to describe this reality as “solidarity” rather than as “cooperation” offends their sense of liberty and diversity. E pluribus unum is the national motto, but its key lies as much in respect for diversity, pluralism, and freely given cooperation as in ultimate unity.

Unaccountably, the final draft hardly ever quotes from American sources — from Jefferson, Madison, Lincoln, Franklin Delano Roosevelt, John F. Kennedy; from Jonathan Edwards, Orestes Brownson, William James, Reinhold Niebuhr, John Courtney Murray; from the Third Plenary Council of Baltimore, Bishop Spaulding, Archbishops Ireland, Hughes, Gibbons; or even from the writings on America of Alexis de Tocqueville, Edmund Burke, John Stuart Mill, and Lord Acton. Instead, most of the intellectual sources of the final draft are derived from the European or Latin American experience.

(7)  An inadequate exposition of “liberty.” Liberty, a highly equivocal word, is nonetheless central to the American experiment in politics, economics, and cultural pluralism. The history of its conceptualization, of the habits of the heart in which it is embodied, and of its institutional realization in the United States is quite different from its history in other cultures around the planet. In not a few countries of Europe, for example, liberty frequently means liberty from the law or against the law. By contrast, the liberty Americans cherish is liberty under law and liberty under God. (This is why the Statue of Liberty carries a book or a tablet of the law in one hand, a torch signifying mind against darkness in the other, why liberty is symbolized by a woman and not a warrior, and why her face is serious, purposive, and resolute.) For Americans, “confirm thy soul in self-control” is a key to the expression “sweet land of liberty.” No American hymn sings of a “sweet land of equality.” The equality Americans value lies in “equality before the law,” under a regime “of laws, not of men.” Such equality demands a broad range of diverse outcomes, consistent with the use each free person makes of his or her unique talents and common liberties.

By contrast, an underlying theme behind the final draft appears to be a vision, not of justice based on liberty, but of an equality of income and wealth. That concept of equality is incompatible with respect for liberty. It is also necessarily unfair, since individuals differ enormously both in talent and in effort; equal outcomes are accordingly unjust. James Madison pointed out in the Federalist that a regime of liberty depends upon a diversity of faculties for acquiring property, on the grounds that such diversity is always found among men. He resisted in the name of liberty all appeals to such envy as is destructive of both liberty and prosperity. Thus, certain conceptions of equality are hostile to the American Constitution and to Catholic social thought. The final draft does not adequately explore the tension between equality and liberty.

It is not possible to give an adequate exposition of the U.S. economy without discussing the particular American understanding of liberty, and especially of economic liberties. In fact, the U.S. Constitution in many places devotes many lines precisely to the economic liberties reserved to American citizens. The powers of the federal government concerning economic liberties are specifically enumerated and limited. These limitations have been of no small consequence for the progress of the practical arts and practical sciences in this blessed land. Indeed, in Article I the government of the United States expressly committed itself to “promote the progress of science and useful arts” through granting to “authors and inventors” for a limited time “the right” to the fruit of their discoveries. James Madison (against Jefferson, who preferred prizes administered by government) expressly argued that a regime of personally directed liberty, attracted by incentives, would be most beneficial to unleashing a tide of invention and discovery. Thus the founders acted upon the hypothesis that the primary cause of the wealth of nations is progress in the arts and sciences, that is, invention and discovery. This is the only place in which the word right is used in the body of the original Constitution. It is a provision of immense and untold significance for economic development.

In brief, we are saddened that the final draft fails to grasp the conceptual and institutional originality of the U.S. experiment in economic development. To hold that the U.S. founders launched an experiment in political and civil rights chiefly, as the final draft asserts, is historically inaccurate; the American experiment in economic rights (understood roughly as in Pope John XXIII’s Pacem in Terris, nos. 18-22) was of at least equal universal relevance. Indeed, it is difficult to imagine the subsequent economic development of contemporary West Germany, Japan, and even nineteenth- century England; apart from lessons learned through the American experiment in economic rights. Scholars and statesmen from around the world have studied this economic experiment assiduously.

(8) Inadequate descriptions of reality in the contemporary United States. In describing poverty, income, wealth, welfare, taxation, and unemployment in the U.S., the final draft omits many important facts and, on the whole, gives a one-sided and partial description of reality.

(a)  Poverty. In 1985, the official measure of poverty in the U.S. was virtually $11,000 for a non-farm family of four. To be grasped adequately by non-Americans, this standard must be translated into the currencies of their own nations. Whereas only 14 percent of U.S. citizens fall below this standard, far higher percentages fall below it in most nations of the world, even in Western Europe. This standard was derived by allowing, annual expenditure of $3,666 ($70 per week) for food, and multiplying that amount by three. Moreover, it counts pre-tax, cash income only, omitting the market value of such governmentally derived benefits as food stamps ($11 billion in 1985), housing assistance ($6 billion), medical care ($37 billion), free public education through the twelfth grade, and other benefits. If the total package of non-cash, means-tested benefits given to the poor by the U.S. federal government in 1985 ($56 billion) were divided among the nation’s seven million poor families, these benefits would average $8,000 per family. The non-means-tested benefits (Medicare for those over age 65, e.g., goes to all, not only the poor) would take the total of federal benefits disbursed to individuals in 1985 to $127 billion. This does not include benefits paid by the states, localities, and private sources.

There are heartrending problems among some of the poor in the United States. We have not yet designed optimal programs to assist them. But it is wrong to pass over in silence the fact that the generation of U.S. citizens since 1965 has authorized immense annual monetary outlays to help the poor.

In stating the percentage of the U.S. poor (14 percent), one must also take into account the non-cash benefits given to the poor in 1985, benefits scarcely in existence in 1965. For the individuals represented by the statistics in 1985, “poverty” does not have the same meaning as it did before the funding of so many non-cash benefits. Moreover, in counting income, the Census Bureau does not now take account of personally held assets or voluntary choice of a way of life. Not all who have low incomes are involuntarily poor.

Finally, it should be noted that more than six million immigrants, most of them very poor, arrived in the U.S. during the decade of the 1970s. (An equal number is entering during the 1980s.) Although most arrive poor, the vast majority does not long remain poor, even by official figures. Most quickly seize the immense opportunities available to them.

(b) Income and wealth. The final draft (no. 182) finds the distribution of income in the United States “unacceptable.” But this means that the distributions of income in all but a handful of smaller, more culturally homogeneous nations (such as Sweden, the Netherlands, Denmark), are also “unacceptable.” Since hardly a score of nations in all of human history have done better in this respect, the final draft would appear to find most life on earth “unacceptable.” Most Americans who have high incomes today arose from poor families, and many descendants of formerly high- income families now experience lesser income. In America, there is a very rapid churning — up and down — among income groups. Income patterns are not stationary. Income does not arrive through political privilege; it must be earned.

In addition, for any one individual, income varies by age. Most persons pass through several different income quintiles during their lifetime. Most attain the apogee of their annual income from ages 40 to 55. Both before and after that period, they tend to be in lower quintiles.

Moreover, on the whole, those who invest years of study in higher education (during which, statistically, they appear in the lowest quintile), eventually receive above-average in-comes. Measures of inequality must be corrected for age distributions and differences in educational attainment.

The unusually large cohort of the “baby boom,” born between 1945 and 1965, began entering the low end of the income statistics in about 1965. Until about 1980, their unusually large presence in the national statistical profile (“like a pig in a python”) served to swell the lower income quintiles. More members of the baby boom generation have received university educations than any other generation, so it is no wonder that, as they grow older, their above-average incomes begin to swell the ranks of the upper two quintiles. During the 1980s, more and more Americans have begun receiving incomes in excess of $31,500 per annum (the threshold of the top two quintiles in 1984). Among more than half of them, both spouses are income earners. Thus, the number of American households earning between $31,500 and $73,000 (the threshold for the top five percent) is at an unprecedented level. From 1970 to 1984, the number of households earning $50,000 or more has grown from 6.5 million to over 11 million. Is this unfair or immoral? On the contrary, it is a sign of the system’s considerable moral and financial health.

In 1983, the percentage of tax returns reporting more than $100,000 in income (an income about nine times larger than the official poverty level of $11,000) was only 1 percent. This includes movie stars, athletes, pop singers, inventors, authors, television personalities, some lawyers and doctors and farmers, many small businessmen, as well as executives of major corporations, government, universities, and other institutions. Is it “unacceptable” that about 1 percent of households earns more than $100,000 per year? Particularly, if most of these did not inherit, but earned, such income?

It is difficult to understand the reasoning of the final draft in no. 182. The draft argues that current distributions of income in the U.S. are unacceptable “as long as there are poor, hungry, and homeless people in our midst.” But a mere $45 billion in cash income would raise all persons in the U.S. above the poverty line, independently of the non- cash benefits (far in excess of that amount) already funded. This could be done, even if current income distributions remained as they are. Consider the following two proposals. Helping the “poor, hungry, and homeless” could be done without significantly changing income distributions. Income distributions could be changed without helping the “poor, hungry, and homeless.” Since the two issues are notionally quite different, the true impulse in no. 182 is not easy to discern. Clearly, it is not practicality. It can hardly be envy, or even guilt, since it is not wrong for bishops to maintain a standard of living suitable to their station, which certainly places them in the 80 percent to 95 percent range of all in-comes (for 1984, between $45,300 and $73,230), if not in the top 5 percent (above $73,230).

(c)  Taxation. The final draft expresses a preference for “progressive taxation,” but without describing the actual results of the pre-1985 tax system in the U.S. In 1983 (the latest year for which figures are available), approximately 100 million households and individuals paid income taxes. Twenty percent of all income taxes were paid by the top 20 percent. Less than 5 percent were paid by the bottom 40 percent. This seems reasonably fair — those with higher in-come paid more taxes. But there is also a curious wrinkle.

The final draft does not advert to the crucial difference between tax rates and tax revenues. Beginning in 1981, the U.S. Congress lowered tax rates for everybody. Yet the effect has been, year by year, that the high-income households — even at lower rates — have been paying higher amounts (and proportions) of actual taxes paid. In other words, lower rates bring in more taxes from higher-income persons than higher rates did.

Based upon this experience, beginning in 1986, Congress has “flattened” U.S. tax rates considerably, leaving only four “progressive” rates, and lowering existing rates for everyone. The poor and the near-poor will no longer pay any income tax at all. Tax-exemptions for each child will go up. The expected result is that taxes for couples with children, earning below $20,000, will either disappear or drop substantially. Nonetheless, while almost everyone will be taxed at lower rates than before, the government’s actual intake from taxes will probably go up, and the proportion of all taxes paid by the wealthy should rise significantly.

In short, tax rates change incentives, behaviors, and amounts of taxes actually raised by governments. A merely “progressive” scheme of tax rates is not sufficiently sophisticated. One can lower tax rates, and even “flatten” them considerably, and still gain more revenue than before from high-income quintiles. To benefit the common good, it is not necessary to be punitive toward earners of high income. These are empirical propositions, confirmed by recent experience, but falsifiable by contrary experience.

By contrast, the final draft approaches high income earners in an adversarial tone. It fails to note the high proportion of taxes paid by the top quintile in 1985. It fails to foresee the probability that, after the tax reform of 1986, the top quintile will probably pay an even higher proportion of all taxes paid.

Far from having led the way to tax reform, the three drafts of the pastoral have so far been left behind by events.

(d) Welfare. Since most analysts of the experiments in welfare since 1965 have come to see the role of family life as crucial to the poor, many lay persons had expected the Catholic bishops to lay great stress on Catholic teaching regarding the family. While five million of the poor live alone, the vast majority of the U.S. poor (about 26 of 33 million in 1985) lives in seven million poor families. Half of these are the result of separation, divorce, or having children out of wedlock. No other cause of poverty ranks as high as family breakdown. Looked at from another perspective, there are 50.4 million “intact” families in the U.S. Of those, only 6.8 percent are poor. 93.2 percent are not. To keep husband and wife together is one of the best routes out of poverty.

One million poor families in 1985 fell below the poverty line by less than $1000; another million by less than $2000; and so on. Since poverty statistics reflect pre-tax income, the 1986 tax law exempting the poor from all income taxes will not change their official status; but it will change their condition, by leaving more money in their hands.

Despite this nation’s many successes in raising up the poor, the question does remain of those less fortunate per-sons who are unable to participate happily and fruitfully in our economy. Catholics must respond to the moral imperative to “love our neighbor,” especially those neighbors who fall into the category of the involuntarily poor. But as we noted in our Lay Letter, Toward the Future (pp. 58-66), it is important to see precisely who the poor are and what their many, diverse needs are. Lumping the poor together in one undifferentiated mass is likely to result in errant, wasteful, and ineffective public policies. For example, not all the poor are trapped in dispiriting cycles. The so-called “underclass” has become highly visible in the media during the past year or so, although poor blacks in predominantly poor metropolitan areas constitute only a small fraction (about 16 percent) of the poor.

The final draft recommends a nationalization of welfare benefits, probably with the expectation that the low-benefit states will thus be brought up to the level of the high-benefit states. Political reality suggests that the opposite is the more likely result. This does not seem to be what the bishops intend.

Welfare policy in the U.S. is chiefly the responsibility of states. Since economics, cultural, and institutional factors affect the fifty states differently, the principle of subsidiarity would seem to commend the course of federalism, rather than the course of nationalization. Some of the differences among states may be almost as extreme as among the nations of continental Europe, and a single continental welfare policy for Europe would no doubt be unworkable. In addition, welfare policy in the U.S. is probably well served by having the different states try different experiments, so as to learn from each other.

To give the seven million poor families in the U.S. $11,000 every year would cost only $77 billion. Current welfare programs disburse larger sums than that. So there is reason to believe that a revolution in our thinking about welfare is urgently needed. Despite vast expenditures of funds, too many sufferings continue, too many pathologies linger, and too many lives fall into dependency and cycles of despair. It has, therefore, become clear to most analysts, left and right, that the problem of welfare is not primarily monetary. Who better than bishops can address the moral dimensions of welfare payments? Welfare programs should be designed to inspire self-reliance, autonomy, fruitful and lasting marriages, and a sense of personal dignity based upon achievement. If human dignity is rooted in work, welfare should also include a component of work, for those who can work. There is much to be said about welfare reform that cannot be said professionally by social scientists that bishops could say. The moral dimension of welfare is crucial.

Analysts are no longer ignoring the moral factor; namely, the role of character, moral obligation, and the public ethos. A demand for benefits, without a correlative acceptance of social duties, permissive sexual standards, pregnancies apart from marriage, separation and divorce, and a general shift from self-control to “self-expression” have injured the economic chances of several million of our fellow citizens. Consider the burdens of female-headed households. If the percentage of Americans living in such households had remained at 1959 levels (8 percent), there would have been 7 million fewer poor persons in 1984, all other factors held constant.

One of the most effective social justice programs today is the private parochial school operating in our nation’s inner cities. These schools offer a stable, moral environment in which poor children learn a special respect for hard work, charity, intellectual accomplishment, and self-discipline. We can think of few institutions more worthy of our support than the inner-city private and parochial schools, many hard-pressed by financial difficulties.

Again, the problem of poverty requires more than a monetary response, however necessary that may be. A reinvigoration of our Jewish and Christian moral traditions would open up a crucial second front in the war on poverty. Ironically, the bishop’s Pastoral Letter still lacks a clear call for attention to the spiritual and psychological dimensions of poverty.

(e) Unemployment. Contrary to the suggestion that our economy has been weak in providing job opportunities, over 30 million jobs have been created in the U.S. in the last 15 years, more than 10 million in the last 4 years alone. Moreover, in speaking of unemployment the final draft fails to note the incredible ease with which, each year, about 9 percent of all Americans voluntarily quit their jobs. This personal choice usually involves some weeks “between jobs.” This social fact, uncommon elsewhere in the world, helps to explain why more than half of all the U.S. unemployed are out of work for at most fifteen weeks. The suffering of those, particularly older men or women with families, who are involuntarily out of work for longer periods is keen. It depreciates that suffering to lump such persons without distinction among those who prefer to pick and choose among available jobs, until the right one (in income and in conditions of employment) comes along. There is a profound moral difference between workers with a “preference schedule” and those willing to do whatever is required, but unable to find it. Among the latter, there is real suffering to be addressed.

Again, powerful evidence demonstrates that the “work ethic” is stronger than ever in the U.S., at least as measured by the proportion of adults actually employed. A record- setting percentage of civilian Americans over the age of 16 are employed (61 percent, as of July 1986, compared to 56 percent in 1975). In past years of low unemployment (e.g., 4.5 percent in 1965), a significantly lower proportion of adults were actually employed (56 percent). In some ways the percentage of the employed is a more telling indicator than the percentage of the unemployed. The latter cannot be fully understood without the former.

Finally, the final draft fails to anticipate the severe labor shortage certain to appear in the 1990s, as the much smaller cohort behind the “baby boom” comes of age. Declining birth rates already worry employers. In order to attract workers, service establishments are now offering up to twice the minimum wage ($14,000 per year). At places the final draft disparages “low-paying, high-turnover jobs,” while failing to recognize how such jobs meet the temporary needs of many employees.

(8) The hunger for moral guidance. The American people have been blessed from the beginning with a tradition of sound moral habits. In the press, ordinary virtues are not “news”; such simple habits as honesty, candor, initiative, inventiveness, practicality, teamwork, and courtesy are common among our population and have important social consequences. A lie told in public has the power to shock; in private, it may mark the end of a friendship. Sloth and irresponsibility in co-workers are not appreciated. Moreover, Americans place unusual emphasis upon the practice of social virtues beyond the family. Americans join many associations and go to many meetings. They tend to be extroverted and associative, rather than introverted and loners.

In such ways, Americans exhibit the virtues proper to the institutions of democratic, capitalist, and pluralistic societies. The virtues proper to American society are not the same as those proper to traditionalist societies. Every social system both depends upon and encourages certain habits, inhibiting others. As Americans grow more prosperous and judge their own conditions by higher and higher standards, some — it is true — price themselves out of some labor markets and regard certain forms of employment as unattractive. As in the past, newer immigrants find precisely the same opportunities quite liberating, compared to what they have known before. In this way, classic American virtues renew their relevance.

In The Cultural Contradictions of Capitalism, Daniel Bell argues that the economic success of capitalism changes the ideas and morals of the population, and that the breaking point in our three systems lies primarily in the moral and cultural system. But the moral and cultural system is precisely the system most entrusted to the care of moral and cultural leaders — such as professors, film makers, television personalities, the press, teachers, the clergy, and the bishops. When the moral-cultural system becomes relativist or “permissive,” the habits necessary for self-government in politics, and for concern about the future in the economic system, are undermined. For this reason, many Americans long for greater moral guidance from moral leaders. Betrayal by moral and cultural leaders tears the social fabric. A “breakdown of morals” makes both democracy and capitalism unworkable. When a sense of personal responsibility falters, such necessary virtues as impulse-restraint, self-mastery, self-reliance, and mutual cooperation falter. Without these, institutions based upon self-government and personal responsibility cannot function. In our judgment, the American people cry out for moral leadership; but too many moral and cultural leaders are silent about a relatively permissive personal morality, and prefer to declaim on politics.

(9) “Economic Justice for All” must be preceded by Economic Justice for Nuns. The credibility of a pastoral on “Economic Justice for All” will be undermined if all of us together in the Catholic church, laypersons, clergy, and bishops, do not immediately remove the scandal of the economic poverty of nuns, abandoned in their old age, without pensions, obliged to turn to the state rather than to the church for assistance. During so many years, these valiant women have given us so much, in schools, in hospitals, and in untold works of mercy. Each of us recalls individuals among them with great gratitude. For us, they have been the salt of the earth. In their old age, they deserve the best from us. The stories we now hear of them dependent in their old age upon food stamps and welfare, shame our consciences. In a praiseworthy fashion, the final draft faces this issue (no. 348). We wish to signal our support. Our Lay Commission is eager to help raise a pension fund that would support retired sisters in independent dignity. This is a high priority of justice and love.

For all these reasons, we are grateful to our bishops for opening up a dialogue — just in time for the two-hundredth anniversary of the U.S. Constitution — on moral and foundational issues. We also thank them for the open manner in which they have proceeded, and for inviting public criticism and debate. In response, we have tried to meet our own responsibilities as lay Catholics. What the final draft has done well, we admire. We welcome especially its emphasis upon lifting up the poor.

On the other hand, we believe that in several of its empirical descriptions, in some of its political and economic conceptions, and in many of its practical recommendations, the final draft falls, short of its own manifest intentions. It intends to help the poor. In several key respects, it is likely to hurt those it intends to help. We are especially sad that the final draft falls short of a full understanding of the American experiment in economics, fully as original and fully as exemplary as its experiment in political and civil liberties.

We hope that the debate continues. We would be grateful if the bishops saw fit to circulate this report as an appendix to the final draft which they will formally approve, as a sign of the respectful dialogue they intend to open up among Catholics of all points of view upon such properly disputed questions.