Brian R Corbin's Reflections on Religion and Life

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Globalization: Justice, Poverty and Peace

GLOBALIZATION WORKS ONLY WHEN ALL CAN GROW, SAYS CARDINAL GEORGE GREETING WORLD DAY OF PEACE MESSAGE

WASHINGTON—Globalization works only when all can grow, said Cardinal Francis George of Chicago, president of the United States Conference of Catholic Bishop, December 12. “The moral dimension of world poverty must be addressed if we are to have world peace.”
Cardinal George made his comments in response to Pope Benedict XVI’s 2009 World Day of Peace message, released at the Vatican, Dec. 11. The message is titled “Fighting Poverty To Build Peace,” and highlights the dangers of massive inequality among peoples of the world.
World Day of Peace is January 1.
“In today’s globalized world, it is increasingly evident that peace can be built only if everyone is assured the possibility of reasonable growth: sooner or later, the distortions produced by unjust systems have to be paid for by everyone,” Pope Benedict said. “It is utterly foolish to build a luxury home in the midst of desert or decay. Globalization on its own is incapable of building peace, and in many cases, it actually creates divisions and conflicts. If anything it points to a need: to be oriented towards a goal of profound solidarity that seeks the good of each and all. In this sense, globalization should be seen as a good opportunity to achieve something important in the fight against poverty, and to place at the disposal of justice and peace resources which were scarcely conceivable previously.”
Pope Benedict listed several areas of concern and noted that “fighting poverty requires attentive consideration of the complex phenomenon of globalization.” He cited moral implications of poverty and campaigns to reduce birth rates “sometimes using methods that respect neither the dignity of the woman, nor the right of parents to choose responsibly how many children to have; graver still, these methods often fail to respect even the right to life. The extermination of millions of unborn children, in the name of the fight against poverty, actually constitutes the destruction of the poorest of all human beings.”
He said that “since the end of the Second World War, the world’s population has grown by four billion, largely because of certain countries that have recently emerged on the international scene as new economic powers, and have experienced rapid development specifically because of the large number of their inhabitants. Moreover, among the most developed nations, those with higher birth-rates enjoy better opportunities for development. In other words, population is proving to be an asset, not a factor that contributes to poverty.”
The Holy Father cited concern for pandemic diseases, such as malaria, tuberculosis and AIDS. “Efforts to rein in the consequences of these diseases on the population do not always achieve significant results,” he said. “It also happens that countries afflicted by some of these pandemics find themselves held hostage, when they try to address them, by those who make economic aid conditional upon the implementation of anti-life policies.”
“It is especially hard to combat AIDS, a major cause of poverty, unless the moral issues connected with the spread of the virus are also addressed,” he said also. First and foremost, educational campaigns are needed, aimed especially at the young, to promote a sexual ethic that fully corresponds to the dignity of the person; initiatives of this kind have already borne important fruits, causing a reduction in the spread of AIDS. Then, too, the necessary medicines and treatment must be made available to poorer peoples as well. This presupposes a determined effort to promote medical research and innovative forms of treatment, as well as flexible application, when required, of the international rules protecting intellectual property, so as to guarantee necessary basic healthcare to all people.”
Pope Benedict highlighted child poverty especially.
“When poverty strikes a family, the children prove to be the most vulnerable victims: almost half of those living in absolute poverty today are children,” he said. “To take the side of children when considering poverty means giving priority to those objectives which concern them most directly, such as caring for mothers, commitment to education, access to vaccines, medical care and drinking water, safeguarding the environment, and above all, commitment to defence of the family and the stability of relations within it. When the family is weakened, it is inevitably children who suffer. If the dignity of women and mothers is not protected, it is the children who are affected most.”
The pontiff stressed the “relationship between disarmament and development. ”
“The current level of world military expenditure gives cause for concern. As I have pointed out before, it can happen that ‘immense military expenditure, involving material and human resources and arms, is in fact diverted from development projects for peoples, especially the poorest who are most in need of aid.’”
“This state of affairs does nothing to promote, and indeed seriously impedes, attainment of the ambitious development targets of the international community,” he added. “What is more, an excessive increase in military expenditure risks accelerating the arms race, producing pockets of underdevelopment and desperation, so that it can paradoxically become a cause of instability, tension and conflict.”
The pope cited “the current food crisis, which places in jeopardy the fulfillment of basic needs.”
“This crisis is characterized not so much by a shortage of food, as by difficulty in gaining access to it and by different forms of speculation: in other words, by a structural lack of political and economic institutions capable of addressing needs and emergencies. Malnutrition can also cause grave mental and physical damage to the population, depriving many people of the energy necessary to escape from poverty unaided. This contributes to the widening gap of inequality, and can provoke violent reactions,” he said. “All the indicators of relative poverty in recent years point to an increased disparity between rich and poor. No doubt the principal reasons for this are, on the one hand, advances in technology, which mainly benefit the more affluent, and on the other hand, changes in the prices of industrial products, which rise much faster than those of agricultural products and raw materials in the possession of poorer countries. In this way, the majority of the population in the poorest countries suffers a double marginalization, through the adverse effects of lower incomes and higher prices.”
He stressed the need for global solidarity and the fight against poverty.
“One of the most important ways of building peace is through a form of globalization directed towards the interests of the whole human family,” he said, noting “there needs to be a strong sense ofglobal solidarity between rich and poor countries, as well as within individual countries, including affluent ones.”
He cited natural law as calling us to global solidarity.
“Effective means to redress the marginalization of the world’s poor through globalization will only be found if people everywhere feel personally outraged by the injustices in the world and by the concomitant violations of human rights,” he said.
He spoke of international commerce and finance and voiced concern for processes “ dividing and marginalizing peoples, and creating dangerous situations that can erupt into wars and conflicts.”
“Since the Second World War, international trade in goods and services has grown extraordinarily fast, with a momentum unprecedented in history,” he said. “Much of this global trade has involved countries that were industrialized early, with the significant addition of many newly- emerging countries which have now entered onto the world stage. Yet there are other low-income countries which are still seriously marginalized in terms of trade. Their growth has been negatively influenced by the rapid decline, seen in recent decades, in the prices of commodities, which constitute practically the whole of their exports. In these countries, which are mostly in Africa, dependence on the exportation of commodities continues to constitute a potent risk factor. Here I should like to renew an appeal for all countries to be given equal opportunities of access to the world market, without exclusion or marginalization.”
The Holy Father voiced similar concern in the area of finance.
“Today this appears extremely fragile: it is experiencing the negative repercussions of a system of financial dealings – both national and global – based upon very short-term thinking, which aims at increasing the value of financial operations and concentrates on the technical management of various forms of risk,” he said. “The recent crisis demonstrates how financial activity can at times be completely turned in on itself, lacking any long-term consideration of the common good. This lowering of the objectives of global finance to the very short term reduces its capacity to function as a bridge between the present and the future, and as a stimulus to the creation of new opportunities for production and for work in the long term. Finance limited in this way to the short and very short term becomes dangerous for everyone, even for those who benefit when the markets perform well.”
Pope Benedict called for “an ethical approach to economics on the part of those active in the international market, an ethical approach to politics on the part of those in public office, and an ethical approach to participation capable of harnessing the contributions of civil society at local and international levels.”
He noted that globalization must include “giving priority to the needs of the world’s poor, and overcoming the scandal of the imbalance between the problems of poverty and the measures which have been adopted in order to address them. The imbalance lies both in the cultural and political order and in the spiritual and moral order. In fact we often consider only the superficial and instrumental causes of poverty without attending to those harboured within the human heart, like greed and narrow vision. The problems of development, aid and international cooperation are sometimes addressed without any real attention to the human element, but as merely technical questions – limited, that is, to establishing structures, setting up trade agreements, and allocating funding impersonally. What the fight against poverty really needs are men and women who live in a profoundly fraternal way and are able to accompany individuals, families and communities on journeys of authentic human development.”

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Filed under: consumerism, Economic Policy, Market Place, morals, Official Statements, Papal Teachings, Politics, Social Doctrine, Social Justice

HOLY SEE at INTERNATIONAL FINANCE and DEVELOPMENT CONFERENCE: There is Money for Development

Holy See: There Is Money for Development

Urges Political Will to Make It Available

DOHA, Qatar, DEC. 1, 2008 ( Zenit.org ).- Developed countries’ pretext that aid for poor countries is “too cumbersome” is an excuse lacking in sincerity, as military and bailout spending proves, affirmed the Holy See.This affirmation was made today by Archbishop Celestino Migliore, permanent observer of the Holy See to the United Nations, at the U.N.-sponsored meeting on development under way in Qatar.

The archbishop acknowledged that the meeting is unfolding under the shadow of a worldwide, unprecedented economic crisis.

“At its root, the financial crisis is not a failure of human ingenuity, rather of moral conduct,” he contended. “Unbridled human ingenuity crafted the systems and means for providing highly leveraged and unsustainable credit limits, which allowed people and companies alike to pursue material excess at the expense of long-term sustainability. Unfortunately, we are now seeing the effects of such short-term greed and lack of prudence, and as a result those who recently were able to rise out of extreme poverty are now likely to fall back.”

The Holy See representative proposed that the Doha conference’s “great challenge” is ensuring sustainable financing for development.

“Global development is, at its heart, a question not only of technical logistics but more fundamentally of morality,” he said. “Social and economic development must be measured and implemented with the human person at the center of all decisions. The last six years have seen an increase in aid flows and encouraging developments in a number of indicators and statistics.

“However, questions remain: How many people don’t have access to food, how many live with fear of war and oppression, how many do not have access to even basic health care and how many lack decent employment to provide a living wage for themselves and their families? Unfortunately, the answer remains: too many.

“These are the questions and concerns which must be at the heart of our strategies in order to ensure that development is measured not only by capital gain but more importantly by lives sustained.”

International support

After recalling that each individual government must uphold principles to provide the means for personal and global development, the prelate affirmed that nations need the support of the international community.

He praised the fact that “we have seen renewed commitment towards the target of 0.7% Gross National Income in Official Development Assistance (ODA). However, we still remain far behind this goal and have recently seen a slight decline in ODA.”

“Too often,” Archbishop Migliore lamented, “developed countries state that development assistance is too cumbersome, yet such an explanation lacks sincerity, especially when we see the increase of military spending at levels many times greater than development assistance. Similarly, the recent financial crisis demonstrates that when political will is combined with concern for the common good we are able to generate, within months, substantial funds for financial markets which are far greater than the total amount of ODA expended since Monterrey. Surely, it goes without saying that the same political will and concern for the common good of the financial systems applies to the poorest and most vulnerable.”

Moreover, the archbishop continued, the international community needs to have greater respect for those nations who need financial assistance.

“The Bretton Woods institutions need to be refocused and the so called G-8 and G-20 countries must ensure that the voices of those who are in such need of development assistance are heard and respected,” he affirmed. “A purely top down approach to development will remain insufficient unless greater concern is given to those whose lives and countries are at stake.”

Archbishop Migliore concluded by acknowledging that the prevailing attitudes are “uncertainty and anxiety.” But he voiced a word of confidence: “[T]he virtues and principles which have lead the global community out of so many crises remain; that of solidarity with our global community, just and equitable sharing in resources and opportunity, prudent use of the environment, restraint from seeking short-term financial and social gain at the expense of sustainable development, and finally, the political courage which is necessary to build a world in which human life is placed at the center of all social and economic activities.”

“By embracing these fundamental principles,” the archbishop affirmed, “we will help to create a world in which social, economic and spiritual growth is accessible to all.”

— — —

Full text: http://www.zenit.org/article-24435?l=english

 

Holy See to Doha Conference

“Uncertainty and Anxiety Seem to Prevail at This Particular Point in Time”

DOHA, Qatar, DEC. 1, 2008 ( Zenit.org ).- Here is the address Archbishop Celestino Migliore, permanent observer of the Holy See to the United Nations, delivered today at the U.N.-sponsored meeting on development under way in Qatar.

* * *

Mr. President,

Six years ago, world leaders gathered in Monterrey, Mexico to begin a new process for addressing together the needs of the poorest amongst us. At that time, the world was reeling from the terrorist attacks of September 11, 2001, and the subsequent economic decline, but despite these hurdles, it still came together to craft the Monterrey Consensus which created a new vision for a shared future.

Today, we meet in Doha, Qatar to assess the lessons learned and to create ways and means for realizing the vision of Monterrey. However, again we come with a cloud hanging over our heads: the anxiety over the economic and political consequences of an unprecedented financial crisis and the persistent devastating presence of terrorism, as evidenced by the tragic events in Mumbai, India.

This crisis presents an enormous challenge in finding ways to address the concerns of those most in need. At its root, the financial crisis is not a failure of human ingenuity, rather of moral conduct. Unbridled human ingenuity crafted the systems and means for providing highly leveraged and unsustainable credit limits which allowed people and companies alike to pursue material excess at the expense of long-term sustainability. Unfortunately, we are now seeing the effects of such short-term greed and lack of prudence, and as a result those who recently were able to rise out of extreme poverty are now likely to fall back.

We often speak of sustainable development as an overarching principle for developing countries. Sustainable development meets the needs of the present without compromising the ability of future generations to meet their needs. Likewise, sustainable financing should meet the present capital needs for development, while ensuring the long-term preservation and increase of resources. It is time for developed and developing countries alike to reaffirm the principle of sustainable financial development apply it to financial markets and thus create truly sustainable capital management. Such is the great challenge of this Conference: nothing less than ensure, in a sustainable way, the financing for development.

Global development is, at its heart, a question not only of technical logistics but more fundamentally of morality. Social and economic development must be measured and implemented with the human person at the center of all decisions. The last six years have seen an increase in aid flows and encouraging developments in a number of indicators and statistics. However, questions remain: how many people don’t have access to food, how many live with fear of war and oppression, how many do not have access to even basic healthcare and how many lack decent employment to provide a living wage for themselves and their families? Unfortunately, the answer remains: too many. These are the questions and concerns which must be at the heart of our strategies in order to ensure that development is measured not only by capital gain but more importantly by lives sustained.

Since Monterrey, we have again seen the importance for each and every country to uphold good governance in order to provide the means for personal as well as global development. Governmental leadership which provides for effective financial systems, just taxation, responsible spending and good stewardship of the environment, sets the foundation for countries upon which to build. Transparency, the rule of law and good governance guarantee the stability and financial certainty needed in order to provide job creation, tax revenues and long term growth. Further, good governance, respect for human rights and social stability assure the means for civil society actors, including faith-based organizations, to offer the life saving and life affirming services which are oftentimes beyond the capacities of national and local governments.

National governments need the cooperation of the international community in order to accelerate economic and human development. Since Monterey we have seen renewed commitment towards the target of 0.7% Gross National Income in Official Development Assistance (ODA). However, we still remain far behind this goal and have recently seen a slight decline in ODA. Too often developed countries state that development assistance is too cumbersome, yet such an explanation lacks sincerity, especially when we see the increase of military spending at levels many times greater than development assistance. Similarly, the recent financial crisis demonstrates that when political will is combined with concern for the common good we are able to generate, within months, substantial funds for financial markets which are far greater than the total amount of ODA expended since Monterrey. Surely, it goes without saying that the same political will and concern for the common good of the financial systems applies to the poorest and most vulnerable.

The international community must also give greater respect for the voices of those countries and individuals most in need of financial assistance. The Bretton Woods institutions need to be refocused and the so called G-8 and G-20 countries must ensure that the voices of those who are in such need of development assistance are heard and respected. A purely top down approach to development will remain insufficient unless greater concern is given to those whose lives and countries are at stake. The United Nations continues to serve as a vital forum for bringing all voices together in order to foster greater global solidarity.

Likewise, renewed attention must be given to ensuring more just and equitable trade systems. These days we have heard many calls for a greater commitment to implementing the Doha-Round trade talks. However, these talks will continue to languish unless countries express the necessary political fortitude to promote fair trade and make the inevitable required sacrifices. Further, trade distorting subsidies, financial speculation, increased energy prices and decreased investment in agriculture have recently given rise to lack of access to the very thing which is necessary for life namely – food. This economic volatility, which strikes at the heart of human existence, gives greater urgency to finding a common commitment to addressing global trade and development.

Mr. President,

Uncertainty and anxiety seem to prevail at this particular point in time. However, the virtues and principles which have lead the global community out of so many crises remain; that of solidarity with our global community, just and equitable sharing in resources and opportunity, prudent use of the environment, restraint from seeking short-term financial and social gain at the expense of sustainable development, and finally, the political courage which is necessary to build a world in which human life is placed at the center of all social and economic activities. By embracing these fundamental principles we will help to create a world in which social, economic and spiritual growth is accessible to all.

Thank you Mr. President.

Filed under: Economic Policy, Papal Teachings, Social Doctrine

What do you think? Towards Doha/International Trade/Development …upcoming meeting…Faith in the marketplace?

25-11-2008

TOWARDS DOHA: WHAT DEVELOPMENT IN TIMES OF CRISIS? Statement by the Observatory in view of the upcoming UN Conference on Development Financing.

 

 

Towards Doha:

what development in times of crisis?

Statement by the  Cardinal Van Thuân Observatory

on the Social Doctrine of the Church

in view of the upcoming UN Conference on Development Financing,

Doha, Qatar

 (27 November – 2 December 2008)

 

 

The upcoming UN conference to be held in Doha will take place at a very particular moment in the international economy, which is dominated by a crisis whose confines have yet to become entirely clear. Do what extent will the crisis reopen discussion on the development goals? Will the already slow progress towards those goals slow down ever more?

The crisis now underway is bringing to the surface some deeply rooted problems that more than a few observers have been decrying for some time, but which have been systematically ignored in the processes regulating the international economy.

People refer to the progressive disjunction between finance and real economy, which is now being “dragged downwards” by the financial crisis. In fact, created as accessories to the markets of goods and services on which companies could find resources to invest in physical, technical and human capital, the financial markets have been uplifted to the level of autonomous creators of wealth, albeit entirely virtual in nature. The crisis on said markets runs the risk of turning into a collapse of the international financial system, withdrawing monetary resources for real investments by companies and consumer purchases by families.

Secondly, the crisis manifests how governments – in some cases as powerless observers, and in other cases, mostly in developing countries, as complacent observers – witness phenomena of planetary tax evasion, that drive enormous amounts of capital towards tax havens, thereby reducing the resources available to national governments for public investments.

Lastly, coming to the surface is the lack of world governance regulators: supranational organizations are weak, far from neutral, not representative, and in any case incapable of giving shape and form to resolute and courageous measures to resolve the problems of the world economy. Moreover, there can be a blatant conflict of interest among diverse organizations, as illustrated by the contemporary nature of the UN conference in Doha and the meeting of the so-called G20. Such conflicts are rendered all the more evident by the inability of the major industrial countries to reach agreement on sensitive issues such as the environment. And even less apparent on the horizon are clear policies regarding the issue of development!

The crisis, therefore, most certainly represents a risk not to be disregarded with respect to development financing, but may also represent an excellent opportunity for people on all levels – transnational organizations, governments, financial institutions, corporations, scholars and public opinion – to become aware of the limits of the idea of development that has assumed pride of place in international economic policies over the last few decades, and the need to surmount those limits in a courageous and coherent manner.

The Social Doctrine of the Church makes its voice heard on this in world debate, and particularly so on the following points:

1)      The recovery of the anthropological dimension of the economy: it just isn’t possible to think about a reform of the world financial system without keeping in mind that the system in question is nothing more than a “servant” to a productive economy centered on man. In other words, economic circuits have to be restructured on the requirements of man, the needs of peoples, so there may be a shift from a rationale of booming wealth to a development of widespread wellness. This recentering of the paradigms used to interpret the economy must take place on various levels: on the institutional level by having governments once again consider the common good as the primary goal; on the entrepreneurial level by once again taking into consideration the rational and harmonious use of resources; and on the level of individual responsibility through the redemption of gratuitousness as an integral value of labor.

 

2)     The reintroduction of ethically grounded systems of regulation and governance: the justice of global governance processes – provided there is peaceful coexistence among peoples and nations – must be based on representative, transparent and impartial international institutions guided by an ethical vision and endowed with effective powers to provide guidance for the actions undertaken by individual governments.

 

3)     The rationale of subsidiarity as the principle inspiring future local and world development policies: globalization manipulated from on high means that local economic structures – especially the weakest ones – are not able at present to discover within themselves the forces or the values for their own renewal.

 

If the system of world decision-makers  is able to tackle these challenges, take on these instances, and once again lend an ear to its own critical voices, it will be possible to overcome the crisis and the processes of real human development will get back on track. Otherwise that system will have to resign itself to its own state of atrophy and isolation within the four walls of its own problems.

Filed under: Economic Policy, Social Doctrine

Ethics and CEO Pay: What do you think? Christian Living?

ZE08112303 – 2008-11-23
Permalink: http://www.zenit.org/article-24342?l=english

SETTING SALARIES

Economic Crisis Forces a Re-Think

By Father John Flynn, LC

ROME, NOV. 23, 2008 (Zenit.org).- The deepening economic crisis is forcing financial institutions and companies to look again at the issue of executive salaries. In recent years concern over ever-higher levels of remuneration had led to widespread debate over the issue, but achieving a change in pay levels or how salaries and bonuses are determined proved to be an elusive goal.

The last few months has seen this situation change dramatically. One leading Wall Street firm, Goldman Sachs Group Inc., announced that their top executives will forgo their bonuses for this year, reported the Wall Street Journal, Nov. 17.

The most senior seven executives will only receive their base salaries, set at $600,000. For chief executive officer Lloyd Blankfein, this compares to the $68.5 million in cash and stock he took home last year.

Goldman hasn’t suffered as much as other financial organizations, the Wall Street Journal noted, but even so, its stock is down more than 60% this year. A decision is still pending on bonuses for the remaining — approximately 30,000 — employees, and the article warned that if they receive low amounts they may look for work at other better-paying companies.

Putting the issue in context, the article reported that since the start of 2002, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns have paid a total of $312 billion in compensation and benefits to its employees. 

Swiss bank UBS also recently announced changes to its pay levels, reported the British newspaper the Guardian, Nov. 18. The bank’s chairman, Peter Kurer, said a new system will do away with a culture of paying out multimillion bonuses and stock options on short-term results.

UBS explained that the payout pool for its bankers and traders would be slashed this year, following a write down of almost $50 billion worth of assets gone bad, and a subsequent 6 billion Swiss franc ($4.9 billion) rescue from the Swiss authorities.

The announcement came shortly after former UBS chief executive, Peter Wuffli, renounced 12 million Swiss francs ($10.2 million) in payments he was eligible for under his contract, reported the Associated Press, Nov. 9.

”I have voluntarily renounced a total of 12 million francs that was due me under my contract,” Wuffli told the Associated Press. ”High payments cannot be justified for top people who leave an enterprise suffering difficult circumstances.”

Bailouts

Government bailouts are one of the main factors in putting pressure on financial institutions to reduce executive salaries. Earlier this year the U.S. Congress authorized a $700 billion bailout, including stock purchases of $125 billion to shore up nine large financial companies.

”Taxpayers have lost their life savings, and now they are being asked to bail out corporations,” New York Attorney General Andrew Cuomo commented in an Oct. 24 report by the Associated Press. Cuomo has been a strong critic of high executive pay levels.

One company that received federal government support, the American International Group (AIG), agreed to freeze compensation and bonuses for its executives, reported the Associated Press, Oct. 22.

AIG chairman, Edward Liddy, wrote to Cuomo saying that no payments will be made from the $600 million compensation and bonus pool of its financial products subsidiary. The subsidiary was the main cause of AIG’s woes and its former head was eligible for a payment of $69 million.

According to a roundup of news on executive pay, published Oct. 21 by the Wall Street Journal, limits on salaries have been adopted in a number of countries. In France business leaders have adopted a code of conduct preventing excessive payments for executives resigning from ailing companies.

In Germany the government has asked top executives at banks that have received federal funds to limit their pay to no more than half a million euro. Similar limits also apply in Sweden.

In Britain prime minister Gordon Brown said that banks seeking government help had agreed to conditions that meant avoiding rewards for failed executives, according to an article published by the Guardian, Oct. 14.

As well, the Financial Services Authority, an independent regulatory body, wrote to the chief executives of the 30 largest banks and building societies saying it shared concerns that “inappropriate” remuneration schemes may have contributed to the market crisis.

Banks aren’t the only ones to find themselves under challenge for high pay. A review published June 15 by the Associated Press of remuneration for the heads of companies in the Standard and Poor 500 index showed that in 2007 the median pay package totaled nearly $8.4 million.

What drew attention was the collective pay of the 10 best-paid CEOs, who made more than half a billion dollars last year. At the same time half the members of this group were leading companies whose profits shrank dramatically.

For example, Rick Wagoner, chief executive of troubled General Motors Corp., had a pay rise of 64% in 2007, up to $15.7 million.

Rules

Opinions over what to do with executive salaries vary widely. Writing in the Nov. 12 issue of the Financial Times, Peter Montagnon, director of investment affairs at the Association of British Insurers, and chairman of the Inter-national Corporate Governance Network, warned against hasty actions.

Remuneration rules for banks and for public companies should be different, said Montagnon. Regarding the former he said that regulators may need to examine if pay systems are encouraging employees to take excessive risks for short-term gain.

When it comes to other public companies Montagnon advocated greater involvement by shareholders in order to set limits. In order to carry out this role, however, they need to have more rights and companies need to disclose more information, he recommended.

“Companies are naive to assume that they can go on indefinitely increasing executives’ remuneration at rates far faster than the rest of the workforce without provoking a political reaction,” Montagnon warned. They also have to be careful that the limits imposed do not have undesirable side effects, he added.

From Australia the former head of Woolworths argued for firm limits on executive pay, according a to a report in the Australian newspaper, Oct. 17. Paul Simons, executive chairman for two decades until 1994, said that in his day there was a strict rule that no executive, even with full bonus entitlements, could earn more than 30 times the wage of the company’s lowest-paid employee. 

“If the lowest-paid adult male in a large company gets $50,000 to $60,000 a year now, then you’re talking around $1.5 million to $2 million for the chief executive,” said Simons. “That’s still a lot of money,” he noted.

Solidarity

Financial markets have played a valuable role in developing the modern economy, according to the Compendium of the Social Doctrine of the Church. At the same time, however, there are risks involved and the globalization of markets has increased the possibility of crises.

Therefore, the text recommends: “One of the fundamental tasks of those actively involved in international economic matters is to achieve for mankind an integral development in solidarity” (No. 373).

This solidarity means promoting the good of every person and achieving a vision that takes into account the need for an equitable distribution of resources, the Compendium explains.

What the level of executive salaries should be is just one facet of the wider task of how to reconcile the forces of economic initiative and the free market with the requirements of solidarity and the common good. No ready-made answers exist on how to achieve this harmony, but the current crisis amply demonstrates the perils of disregarding this duty.

Filed under: Economic Policy, Social Doctrine

G-20 Meeting: Where are the poor in this crisis?

The weekend of November 14-15, 2008 brought together world leaders to Washington DC to discuss the current economic and fiscal crisis.

A Vatican official commented prior to this meeting:

 

IT’S ABOUT MORALS, NOT DOLLARS, SAYS VATICAN AIDE

 

Urges a Broader Look at Economic Crisis

ZE08111411 – 2008-11-14

VATICAN CITY, NOV. 14, 2008 (Zenit.org).- For a problem that is not exclusively financial, there needs to be a solution that is not exclusively financial, a Vatican representative is recalling.

Bishop Giampaolo Crepaldi, secretary of the Pontifical Council for Justice and Peace, said this on Vatican Radio when he discussed the ongoing worldwide economic crisis.

“The crisis that the world is currently living is not just financial, and therefore the solution cannot be purely financial,” he said. Instead, the economic crisis “verifies what the Church’s social doctrine has said for a long time: When an economic-financial system goes into crisis, it is never due to economic of financial motives, but because in its origin, there has been a wound in the global moral system.”

In this sense, the prelate indicated that at the origin, there is a “crisis of trust.” 

“Everyone is speaking of it, of again establishing mutual trust so as to resolve the crisis,” he said. But trust “is not an economic or financial element, but rather an ethical attitude.

“When the market erodes this ethical attitude, all of us know that it is no longer in a state of being reconstructed by itself.”

The Vatican official contended that three elements are key for bettering the situation: “the market, on one side, the state on the other, and also civil society. And this, precisely to respond to those demands and inspirations that come from the principle of subsidiarity.”

According to the social doctrine of the Church, Bishop Crepaldi continued, “it is necessary to look with more wisdom at the market and the role that it can have.”

“We would not have gotten to where we are now if we would have treated the market as a means and not an end,” he affirmed. 

Finally, the prelate made a call to the G-20 nations who will meet Saturday, urging them to work in accord with the resolutions from the Doha conference.

“The fear is that the current financial crisis undermines the work and commitments made by the nations and the international community to finance development,” he said. Instead, the bishop expressed his hope that the G-20 nations will “confirm [aid for poor countries] and take this on with a greater sense of responsibility.” 

 

What do you think we should do as people of faith to ensure that the poor are made front and center of solutions to our current fiscal crisis?

Filed under: Economic Policy, Social Doctrine