Dylan Pahman, one of the Acton Institute’s Janissaries for liberalism, is once again wagging his free-market finger at Papa Francisco for failing to embrace the ethos of capitalism during the latter’s recent trip to Latin America. The article in question, “Show Me the Way to Poverty,” is shot through with missteps and unintended irony, perhaps none greater than Pahman attacking Francis for “speaking outside his competence and vocation” on economic matters. Pahman, it should be noted, is not an economist, nor does he have any formal economic training to speak of. He co-edits Acton’s Journal of Markets and Morality [sic]—an ideological black box with no reputable academic standing—and sometimes tries his hand at Orthodox theology despite his Calvinist theological training. Whatever “competence and vocation” Pahman holds, it is not in either of the subjects he regularly writes on. Of course there is nothing wrong with a bit of amateurishness and perhaps Pahman is more autodidactic than I give him credit for. Even so, it might behoove him not to credential drop on Pope Francis (or anybody else) when his own appear absent.
Now, turning to the meat of the article, it appears that it would also behoove Pahman to actually read the Pope’s words before criticizing them. For instance, among the ills Francis calls to the carpet are “certain ‘free trade treaties,’” which leads Pahman to retort that business and trade “are marks of healthy economies, not the problem[.]” Ah, but Francis didn’t condemned the vocation of business or trade; he simply pointed to the problem of trade treaties which Pahman proceeds to ignore in order to score points on the Pope. It’s not a minor matter since free-trade treaties are rarely “free.” Oftentimes they allow stronger economic powers to both gain access to foreign markets while keeping their own protected, either through express exceptions or juridical machinery that immediately places weaker states (such as those found in Latin America) at a gross disadvantage when it comes to enforcing the ostensibly free-trade terms of the agreement. Here is a simplified example:
Under the World Trade Organization (WTO) agreement, an aggrieved state party may invoke the Organization’s dispute settlement provisions if it believes another state party has defected from the deal. So, for instance, let’s say the United States unilaterally raises tariffs on Costa Rican coffee, inflicting one million dollars in economic damages. After a fairly protracted legal process, Costa Rica may be authorized under the WTO’s dispute settlement provisions to take equal retaliatory measures against the U.S., though that won’t necessarily mean Costa Rica will be able to recoup the one million dollars in damages it has suffered. In fact, taking retaliatory measures may place it in greater economic harm, particularly if it is simply raising the price on goods and/or services its population depends on U.S. firms for. Additionally, Costa Rica would have to take into account what level of political repercussions may arise from engaging in a trade war with the U.S. Although it may not be happy with the U.S. blatantly defecting from a previously agreed upon tariff schedule, Costa Rica knows the price of enforcement, coupled with the limited likelihood of that enforcement actually working, means that it would be more rational to suffer an economic injustice rather than hold a major world power accountable.
That is just one (very simplified) example. If Pahman bothered to dig into the mechanics of regional trade and investment treaties such as the North American Free Trade Agreement or the hundreds of Bilateral Investment Treaties (BITs) strong economic powers routinely enter into with weaker ones, he might have had less cause to clutch his pearls over the Pope’s words. Many BITs, for instance, often allow a foreign-owned firm to sue its host country outside of the latter’s own judicial system. What that means is that a foreign firm receives what is known as better than national treatment when it comes to legal standing. Not only do such measures erode sovereignty; they place native firms at a legal disadvantage vis-à-vis foreign ones, sometimes leading to the sorts of injustices Francis has rightly decried throughout his pontificate.
There is a wealth of literature available on how free-trade and investment treaties “work” (or not) in the Southern hemisphere. While Pahman is right to highlight the role of demagoguery and corruption in keeping Latin America economically unstable, he utterly fails to pay attention to the larger, global forces that also work against the region—the very forces Pope Francis continues to take a firm, moral, and Christian stand against. No, Francis is not an economist and, yes, some of his economic statements can be confusing, particularly when he opts to make them off the cuff rather than enshrine them in an encyclical like many of his predecessors have done. However, none of Francis’s words are as detached from reality as Pahman implies, nor are his moral admonitions a recipe for fiscal disaster. Francis is simply doing what Leo XIII, Pius XI, John Paul II, and Benedict XVI did: Articulate the moral contours of a just economic ordo. Pahman, being Eastern Orthodox, need not pay the popes any mind of course, and given the problems that can drip off his pen when he does, it would be best if he didn’t pay them any mind at all.
