Libertarian economic theory would do well with more virtue and less vice

Preparing for the Apocalypse

By Fr. Jerry J. Pokorsky


With hopes that I’m not falling into some heresy, I find myself persuaded by mainstream libertarian economists. 

Their general positions include: 

• economic law of free markets with limited or no government interference; 
• the law of supply and demand; 
• the responsibility of central governments to collect taxes only for those activities the private sector can’t or shouldn’t provide; 
• and the imperative for governments to avoid excessive taxation and accumulation of debt. 

However, when the famous libertarian economist Milton Friedman enunciated and defended the underlying principle of the free market with the cliché, “Greed is good,” I started to re-examine my unrestricted libertarian tendencies. (Of course, Dr. Friedman may only have been trying to drive home the point that self- interest in economics is just an undeniable fact of life.) But motivations in pursuing wealth and personal security can’t be reduced to mere self-interest culminating in greed.

Libertarian economic theory would do well with more virtue and less vice. My understanding of Catholic social teaching can be summed up by the movie, “It’s a Wonderful Life.” George Bailey and Mr. Potter are both businessmen and capitalists. George is virtuous and has a keen sense for the common good. His society remains family-oriented, with small communities helping one another in tough times. Mr. Potter is greedy and abuses his economic might. His society is money-grubbing, harsh and even pornographic. To my eye the Church teaches businessmen to imitate George Bailey, not Mr. Potter. (Or at least that’s what I would write if I were penning encyclicals on the economy.)

But libertarian fears seem to have a solid foundation in today’s economic realities. With an $18 trillion government debt—with some estimates reaching as high as $80 trillion when taking into account unfunded liabilities such as Social Security and Medicare—the libertarians (and many others) are warning we have passed the point of no return. (A national debt that exceeds a nation’s gross domestic product is a huge problem, especially when there are no political constraints on future deficit spending.)

At some point the stress on the American economy (and the economies of the world because they have the same problem) will bring 

• a) massive inflation and rapidly rising prices; 
• b) mass deflation and unemployment; 
• c) currency wars among the nations of the world, especially between the United States and China; 
• or—well, you get the idea. 

The libertarian solution in the face of unrestrained and reckless government spending is generally to encourage us to buy gold and other valuable hard assets as a hedge against a currency that would lose its economic value in an economic collapse. But is that enough?

There have always been reasonable recommendations to prepare for disasters such as hurricanes, floods or even terrorist attacks. If you can swing it, it seems reasonable to have extra water supplies, non-perishable food, batteries, blankets, generators, etc. to remain safe after a disaster until help arrives. But economic disaster expectations suggest that help will never arrive. Everything will come to a standstill. No electricity; no fuel; no food; it may even be necessary to walk to church.

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