First Things has a succinct review of the basic errors of liberation theology.
Inside Higher Ed ponders the future of small evangelical colleges post-Obergefell:
Friday's Supreme Court decision that states must authorize and recognize gay and lesbian marriages could create major legal challenges for religious colleges -- primarily evangelical Christian colleges that bar same-sex relationships among students and faculty members. Or the decision may not create much of a legal challenge at all. Or it may create challenges, but not soon. ...
"Private institutions that dissent from today's reformulation of marriage must be prepared for aggressive legal attacks on all fronts," said Michael W. McConnell, the Richard and Frances Mallery Professor and director of the Constitutional Law Center at Stanford University Law School. ...
Michael A. Olivas, director of the Institute for Higher Education Law and Governance at the University of Houston and author of The Law and Higher Education, said that the Supreme Court ruling should prompt Christian colleges to rethink their policies. "In an area of social change that is as well defined as this issue is, why would any college want to violate the law by banning relationships that are not only legal, but if they led to marriage would be legal and recognizable in every jurisdiction in the country?" he asked
Olivas said that this issue will likely play out as the Bob Jones case did. ...
Olivas said he could see a "small" exemption for seminaries that train clergy, but not for most Christian colleges that train undergraduates and students for a variety of careers other than becoming a member of the clergy. For most religious institutions, he said, they would need to renounce tax exemptions to maintain their policies. "They can't have it both ways," he said.
And thus, thanks to Professor Olivas and his allies in the secular left, religious liberty likely will die a little bit more, so as to force religious colleges to adopt the changing mores of secular elites.
Silecchia, Lucia Ann, A Witness First Lives the Life He Proposes: Evangelization and the Catholic Lawyer (2015). “A Witness First Lives the Life He Proposes”: Evangelization and the Catholic Lawyer (May 21, 2015). Available at SSRN: http://ssrn.com/abstract=2616323:
This essay was presented at the lecture for legal professionals in Baltimore, Maryland, on May 21, 2015. The roots of the word evangelization are, literally, in the words that mean “to bring good news.” We live in a world that craves good news and, by virtue of our Baptism, all of us – lawyers included – are called to bring good news to a world that, despite all appearances to the contrary, aches for good news and deeply yearns to know the God from whom all good news comes, and to whom all good news leads. I am convinced that there is a powerful role for us in the legal profession to play in this great task of evangelization by being joyful, hopeful witnesses to what is good, just, and simply right. Each are called to respond to the call to evangelize in our own circumstances. This essay explores, briefly, the opportunities that we may have to evangelize, or “bring good news” as lawyers, in three distinct settings: in the ways in which we educate future lawyers; in the way in which our profession is practiced; and, in the substantive law of our land itself.
As tensions over religious freedom mount in the United States and other parts of the world, Pope Francis on Thursday called on a cross-section of Christian leaders to defend the freedom of religious expression against a “misguided principle of tolerance.” ...
“I think of the challenges posed by legislation which, in the name of a misinterpreted principle of tolerance, ends up preventing citizens from peacefully and legitimately expressing their religious convictions,” he said. ...
Cardinal Péter Erdő told the gathering this is a particularly problematic time for Christians, saying that persecution and discrimination also takes place in Europe and represents the suffering of many Christians regardless of denomination.
According to Erdő, president of the European council, it’s as if someone wants to “shelve” the Christian presence in society and to ensure that faith is absent from public life.
This looks interesting:
Because religious piety induces individuals to be more honest and risk-averse, it makes managers less likely to exploit shareholders, thereby mitigating the agency conflict and potentially influencing governance arrangements. We exploit the variation in religious piety across U.S. counties and investigate the effect of religious piety on anti-takeover provisions. Our results show that religious piety substitutes for corporate governance in alleviating the agency conflict. Effective governance is less necessary for firm with strong religious piety. As a result, religious piety leads to weaker governance, as indicated by more anti-takeover defenses. We exploit historical religious piety as far back as 1952 as our instrumental variable. Religious piety from the distant past is unlikely correlated with current corporate governance directly, except through contemporaneous religious piety. Further analysis shows that religious piety is not merely associated with, but rather brings about, more anti-takeover provisions.
Chintrakarn, Pandej and Jiraporn, Pornsit and Tong, Shenghui and Kitsabunnarat-Chatjuthamard, Pattanaporn, Exploring the Causal Effect of Religious Piety on Corporate Governance: Evidence from Anti-Takeover Defenses and Historical Religious Identification (April 21, 2015). Available at SSRN: http://ssrn.com/abstract=2597338
Because anti-takeover defenses are generally regarded as adverse to shareholders, many might question their logic, but the paper offers a slightly more detailed explanation of their hypothesis:
... religious piety induces managers to be more honest and less likely to expropriate from shareholders. As a result, managers are less inclined to exploit shareholders for private benefits. In such firms, strong governance is less necessary because managers are already honest and well-behaved. In other words, religious piety substitutes for strong governance. In addition, anti-takeover devices are less likely to be abused by religious managers. Therefore, they are less harmful in religious firms and are more likely to be adopted. This hypothesis predicts that religious piety is associated with more anti-takeover devices. We label this view “the substitution hypothesis”.
I'm not convinced by the abbreviated analysis in the paper. but it looks like a good project for a number cruncher.
It's not my field, but I have tons of respect for GMU law professor Harry Hutchison and have been reading with great interest his new article on defending religious liberty in a secular age:
Abstract: This article is the first installment of three articles. This article examines and appropriates concepts such as metaphysical univocity (a scheme initiated by John Duns Scotus and enriched by insights proffered by Muslim philosopher Ibn Sīnā) and then considers the immanent frame as part of my defense of religious liberty. The second installment applies my defense to current controversies in the United States. The third installment utilizes ideas and concepts from the first two articles as part of a comparative study of religious liberty in Turkey wherein I considers the status of religious minorities within Turkey’s borders. This tri-part study is sparked by the contention that:The freedom to practice one's chosen faith is of vital importance to the United States. It was a quest for religious freedom that motivated many of America's founders, and this remains fundamental to [the United States]. As President Obama said in 2010, "The principle that people of all faiths are welcome in [our] country, and will not be treated differently by their government, is essential to who we are." Today, throughout the world and indeed even here in the [Organization for Security & Cooperation in Europe] (OSCE), governments and societies are struggling with rising religious diversity even as they are called upon to protect the fundamental rights of individuals in all communities who seek to practice their own religious beliefs.
As [former] Secretary Clinton put it, "religious freedom provides a cornerstone for every healthy society." The right to believe or not to believe, and to practice one’s convictions without fear of government interference or restriction, is a basic human right. Today, religious freedom is restricted in ways both overt and subtle in too many countries, including participating States. [Ambassador Ian Kelly, United States Mission to the OSCE, Delivered at the OSCE (March 3, 2011).]
The first installment of this project shows there are, indeed, grounds for pessimism regarding the fate of religious liberty in both the Latin West and the United States.
I look forward to reading the future installments.
Hutchison, Harry G., Metaphysical Univocity and the Immanent Frame: Defending Religious Liberty in a Secular Age? (April 16, 2015). George Mason Law & Economics Research Paper No. 15-13. Available at SSRN: http://ssrn.com/abstract=2596872
...a story allegedly about a fearful closeted Christian law professor at an elite school? The late William Stuntz at Harvard, Michael McConnell at Stanford, David Skeel at Penn, Stephen Bainbridge at UCLA all seem to have done rather well at elite schools, despite being quite openly religious. (I'm sure there are others, but the preceding scholars have incorporated their religious commitments into at least some of their scholarly and popular writing.) I invite the alleged subject of this article to contact me; I will also preserve his anonymity, but I'd like to pose some further questions about what it is about his institutional environment that would lead to the behavior described. I'm afraid it just doesn't ring true to what I've seen at the institutions I've taught. Yes, levels of religiosity among law professors are not high (though they are higher than among philosophy professors); but norms of collegiality and respect for differences have generally created environments in which no one would reasonably feel a need to go into the closet as described. Maybe I've been lucky, but...
It is true that I've been very lucky. The way my colleagues at UCLA treat my religious commitments ranges from engagement to respect to tolerance to mild bemusement. As far as I know, those commitments have not impacted my pay, promotions, or committee assignments (unless putting me on the dean search committee was intended as a punishment).
I suspect that the real problem is at the hiring stage and even there the problem is only partially bias. As I have argued with respect to hiring bias against conservatives, I think the bulk of the problem arises from two related phenomena: (1) network effects and (2) the tendency of all faculties to replicate themselves, which disadvantages anybody whose credentials are at all out of the ordinary,
I recently came across a several week old column by Rod Dreher. in which he bemoans the state of religious liberty in the USA. (HT: Paul Caron) What particularly caught my eye, however, was Dreher's report of a conversation with a Christian law professor at an elite law school:
I spent a long time on the phone last night with a law professor at one of the country’s elite law schools. This professor is a practicing Christian, deeply closeted in the workplace; he is convinced that if his colleagues in academia knew of his faith, they would make it very hard for him. We made contact initially by e-mail — he is a reader of this blog — and last night, by phone. He agreed to speak with me about the Indiana situation on condition that I not identify him by name or by institution. I do know his identity, and when he tells me that he is “well-informed about the academy and the Supreme Court,” I assure you that from where he sits, and teaches, and from his CV, he is telling the truth.
I will call him Prof. Kingsfield, after the law professor in The Paper Chase.
What prompted his reaching out to me? “I’m very worried,” he said, of events of the last week. “The constituency for religious liberty just isn’t there anymore.”
Reasonable people can disagree about the state of religious liberty in the USA these days. But that's beside the point (or, at least, the point I want to make).
I agree with Kingsfield that secular elites at high end universities and colleges are an annoyingly self-satisfied bunch:
To elites in his circles, Kingsfield continued, “at best religion is something consenting adult should do behind closed doors. They don’t really understand that there’s a link between Sister Helen Prejean’s faith and the workd she does on the death penalty. There’s a lot of looking down on flyover country, one middle America.
“The sad thing,” he said, “is that the old ways of aspiring to truth, seeing all knowledge as part of learning about the nature of reality, they don’t hold. It’s all about power. They’ve got cultural power, and think they should use it for good, but their idea of good is not anchored in anything. They’ve got a lot of power in courts and in politics and in education. Their job is to challenge people to think critically, but thinking critically means thinking like them. They really do think that they know so much more than anybody did before, and there is no point in listening to anybody else, because they have all the answers, and believe that they are good.”
Which is precisely why Kingsfield needs to come out of the closet. Sadly, however, he is going deeper into the closet:
The emerging climate on campus of microaggressions, trigger warnings, and the construal of discourse as a form of violence is driving Christian professors further into the closet, the professor said.
“If I said something that was construed as attacking a gay student, I could have my life made miserable with a year or two of litigation — and if I didn’t have tenure, there could be a chance that my career would be ruined,” he said. “Even if you have tenure, a few people who make allegations of someone being hateful can make a tenured professor’s life miserable.”
He's right. I've been there (albeit for saying something obnoxious unrelated to my faith). But so what?
Polycarp wasn't threatened with people making his life miserable. He was threatened with being burnt at the stake. And he refused to deny Christ. And he went to his death thanking God for allowing him to be counted among the Church's martyrs.
The Christians beheaded by ISIS faced a fate far worse than a smear campaign by academic lefties and they refused to deny Christ.
Put simply, being a Christian is supposed to be hard. "Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake."
It is true that Christ tells us that we are sheep among wolves and so must be as shrewd as snakes and as innocent as doves. But going into a religious closet is not shrewd.
"Neither do men light a candle, and put it under a bushel, but on a candlestick; and it giveth light unto all that are in the house."
I am a sinner who is far from perfect. But I refuse to be a closeted sinner. So I am going to continue teaching and writing about Catholic Social Thought. And I'm going to go on having a picture of St Thomas More in my office. And I'm going to go on having many books on religion in my office. And I'm going to go on wearing my ashes to class on Ash Wednesday. And I'm going to go on pushing back when people infringe on freedom of speech and religion, especially on campuses.
And if my colleagues don't like that, all I can say is "Come and Have a Go If You Think You're Hard Enough." After all, if I may be forgiven quoting the great reformer, "Here I stand; I can do no other."
Update: I've edited this post to eliminate some digressions and generally tighten it up.
Grant me, O Lord, good digestion, and also something to digest.
Grant me a healthy body, and the necessary good humor to maintain it.
Grant me a simple soul that knows to treasure all that is good
and that doesn’t frighten easily at the sight of evil,
but rather finds the means to put things back in their place.
Give me a soul that knows not boredom, grumblings, sighs and laments,
nor excess of stress, because of that obstructing thing called “I.”
Grant me, O Lord, a sense of good humor.
Allow me the grace to be able to take a joke to discover in life a bit of joy,
and to be able to share it with others.
As a conservative and unabashed proponent of democratic capitalism (as the great Michael Novak defined it), you might think I have no problem with the commercialization of Christmas. But you would be wrong. I hate it. It distracts our focus from the child in the manger and the mission for which he became both wholly God and wholly human.
Some years ago Helen and I chose to opt out. We decorate lightly and give gifts to a few close family members. But we stopped giving each other gifts. Instead, we donate the money we used to spend on gifts to Catholic Charities LA and the Los Angeles Mission, both of which do great work for the poor and homeless in our community. It makes the season far less stressful and reminds us annually of what the season is supposed to be about.
You too may find that not buying into the Hallmarkization of Christmas makes it more meaningful.
Rick Garnett blogs:
For everyone planning on attending the AALS Annual Meeting in DC -- and for any law professors or law students who'll be in the area in early January! -- here's information about the upcoming Lumen Christi / Law Professors Christian Fellowship event, featuring our own Rob Vischer and Prof. Barbara Armacost (U. Virginia). Sign up now!
I won't be there, of course, because I never go anywhere I can't get to in my RV. But people willing to subject themselves to the terrors and trials of modern air travel should probably go. I've been to several of their events over the years and they are always rewarding.
Interesting piece from The Economist on the relationship between faith and spending patterns:
The picture that emerges is one of religious types engaging in sensible, but not self-denying, behaviour.
Sadly, it goes off the rails at the end by completely misunderstanding--and grossly taking out of content--the point of Matthew 6:25-29.
In my seminar on Catholic Social Thought (CST) and the Law tonight’s discussion focuses on usury. Why does the Church oppose usury? What is the current teaching on usury? What is usury? Has the Church’s definition of usury and/or its position on usury changed over time? If so, what does that mean for other Church teachings?
Modern American law defines usury using a four factor test: “1) A loan, express or implied. 2) An understanding between the parties that the money loaned must be repaid. 3) In consideration of the loan, a greater rate of interest than is allowed by law is paid or agreed to be paid by the borrower. 4) A corrupt intent to take more than the legal rate for the use of the money loaned.” Kraft v. Mason, 668 So. 2d 679 (Fla. Dist. Ct. App. 1996).
How well does that definition map to CST’s understanding of usury?
Our discussion is bookended by statements from two Popes named Benedict. First, Vix Pervenit (On Usury and Other Dishonest Profit) by Pope Benedict XIV, issued in 1745. Second, Pope Benedict XVI’s Encyclical Letter Caritas in Veritate (Charity in Truth), which was issued in 2009.
Candidly, I find neither to be very helpful at first glance. Benedict XIV, for example, wrote that “it is essential for these people, also, to avoid extremes, which are always evil. For instance, there are some who judge these matters with such severity that they hold any profit derived from money to be illegal and usurious; in contrast to them, there are some so indulgent and so remiss that they hold any gain whatsoever to be free of usury.”
The implication that not all investment profit is usurious is seemingly confirmed by Benedict’s further statement that:
“We do not deny that at times together with the loan contract certain other titles-which are not at all intrinsic to the contract-may run parallel with it. From these other titles, entirely just and legitimate reasons arise to demand something over and above the amount due on the contract. Nor is it denied that it is very often possible for someone, by means of contracts differing entirely from loans, to spend and invest money legitimately either to provide oneself with an annual income or to engage in legitimate trade and business. From these types of contracts honest gain may be made.”
Likewise, Benedict XVI was careful to draw a distinction between microcredit (of which he approved) and usury (which he condemned):
“The weakest members of society should be helped to defend themselves against usury, just as poor peoples should be helped to derive real benefit from micro-credit, in order to discourage the exploitation that is possible in these two areas.”
But where then is the line between what is licit and what is not? (Or, as one of my students asked, is this ambiguity a feature or a bug?)
In An Essay on Mediaeval Economic Teaching (1920), George O’Brien explains that the origins of CST’s position on usury can be traced far back even into Scripture, but that it was Saint Thomas “Aquinas who really put the teaching on usury upon the new foundation, which was destined to support it for so many hundred years, and which even at the present day appeals to many sympathetic and impartial inquirers.” O’Brien quotes Aquinas at some length:
“… we must observe that there are certain things the use of which consists in their consumption; thus we consume wine when we use it for drink, and we consume wheat when we use it for food. Wherefore in such-like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing is granted the thing itself; and for this reason to lend things of this kind is to transfer the ownership. Accordingly, if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. In like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal measure, the other, the price of the use, which is called usury.
“On the other hand, there are other things the use of which does not consist in their consumption; thus to use a house is to dwell in it, not to destroy it. Wherefore in such things both may be granted; for instance, one man may hand over to another the ownership of his house, while reserving to himself the use of it for a time, or, vice versa, he may grant the use of a house while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate [i.e., “to bring action under civil law to enforce rights in specific property whether corporeal or incorporeal or movable or immovable’] the house from the person to whom he has granted its use, as happens in renting and letting a house.
“But money, according to the philosopher, was invented chiefly for the purpose of exchange; and consequently the proper and principal use of money is its consumption or alienation, whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury; and, just as a man is bound to restore other ill-gotten goods, so he is bound to restore the money which he has taken in usury.”
Aquinas’ analysis rests on the proposition that a loan for consumption—a so-called contract of mutuum in Roman law—is a sale. In turn, Aquinas reasoned, the essential moral and ethical requirement in any sale was “the fixing of a just price.” Because the contract of mutuum “was nothing else than a sale of fungibles,” “the just price in such a contract was the return of fungibles of the same value as those lent.” Finally, a loan of money was deemed to be a loan for consumption of the money. Accordingly, one who lent money was entitled to nothing more than “the return of the same amount of money.” O’Brien thus concludes:
“The scholastic teaching … on the subject was quite plain and unambiguous. Usury, or the payment of a price for the use of a sum lent in addition to the repayment of the sum itself, was in all cases prohibited. The fact that the payment demanded was moderate was irrelevant; there could be no question of the reasonableness of the amount of an essentially unjust payment. Nor was the payment of usury rendered just because the loan was for a productive purpose--in other words, a commercial loan.”
This would seem to render the entire edifice of modern finance morally indefensible. As one of my students noted: “When credit cards, consumer credit, student loans, home mortgages, and car payments run virtually everyone’s lives, who seriously considers what it would mean for the charging of interest to be potentially immoral, at least as usury was understood biblical and in ancient and medieval Church doctrine?”
We turn then to Judge John T. Noonan’s book A Church that Can and Cannot Change: The Development of Catholic Moral Teaching. According to Wikipedia:
“John Thomas Noonan, Jr. (born October 24, 1926) is a Senior United States federal judge on the United States Court of Appeals for the Ninth Circuit, with chambers in San Francisco, California. … Noonan was the 1984 recipient of the Laetare Medal, awarded annually since 1883 by Notre Dame University in recognition of outstanding service to the Roman Catholic Church through a distinctively Catholic contribution in the recipient's profession. Noonan has served as a consultant for several agencies in the Catholic Church, including Pope Paul VI’s Commission on Problems of the Family, and the U.S. Catholic Conference’s committees on moral values, law and public policy, law and life issues. He also has been director of the National Right to Life Committee.”
There is no doubt that Noonan is a brilliant lawyer and a devout Catholic. Yet, his view of Church history has been controversial. In its review of Noonan’s book, the NY Times wrote:
“Noonan drives home the point that some Catholic moral doctrines have changed radically. History, he concludes, does not support the comforting notion that the church simply elaborates on or expands previous teachings without contradicting them.”
In contrast, Avery Cardinal Dulles warned in a review of Noonan’s book published in First Things “that Noonan manipulates the evidence to make it seem to favor his own preconceived conclusions. For some reason, he is intent on finding ‘discontinuity’ but he fails to establish that the Church has reversed her teaching in any of the four areas he examines.” So we proceed with the proverbial grain of salt close at hand.
Noonan starts by drawing the reader’s attention to the Parable of the Talents. The power of teaching by parables is that the audience accepts the secular analogy as obviously correct. When the master praises the two servants who doubled the sums they had been given and condemns the one who simply buried (unproductively) the sum he had been given, the import was that earning a return by productively investing money was legitimate. Indeed, the point is rammed home when the master tells the bad servant that, at the bare minimum, he should have taken the talent to the moneylenders to be lent out for a return.
Yet, Noonan cautions that there are aspects of the parable that implicate ancient Hebrew teachings on usury. (The Old Testament contains many injunctions against usury. See William M. Woodyard & Chad G. Marzen, Is Greed Good? A Catholic Perspective on Modern Usury, 27 BYU J. Pub. L. 185, 192 (2012).) In addition, of course, the other famous Gospel passage in which money changers” appear is that in which Jesus drives them from the Temple, which would seem to condemn money lending. Yet, here again, Noonan is cautious, suggesting that “money changers” may not have been bankers.
Instead, Noonan identifies the key Gospel passage as being Luke 6:35:
“…love your enemies and do good to them, and lend expecting nothing back; then your reward will be great and you will be children of the Most High, for he himself is kind to the ungrateful and the wicked.”
The Church’s teaching on usury, Noonan argues, springs from the phrase “expecting nothing back.” The Early Church Fathers saw this passage as a “fulfillment of Mosaic law by way of expansion; the Christians were to love their enemies and to lend without seeking any benefit.” The Fathers thus refused to acknowledge a distinction between a creditor taking interest where the borrower made a profit from the use to which the loan proceeds were put and a creditor taking interest where the borrower used the loan proceeds to buy food to survive.
Personally, I find that distinction a valid one. The Church teaches that there is a preferential option for the poor. The relevant consideration in assessing the morality of lending thus might not be the paying and receiving of interest, but rather the impact of various lending practices on the poor. Put another way, as one of my students argued, the problem is when “a financially stronger party is exploiting a financially weaker or less financially knowledgeable party to an extent which can be said to be morally unjust.” (Note that Benedict XVI’s distinction between usury and beneficial micro-credit might be seen as reflecting this distinction. Note also the discussion below in which Cardinal Dulles embraces this distinction.)
In any case, Noonan argues that during the Middle Ages and continuing right up until the middle of the 1800s the Church’s canon lawyers developed a complex set of rules under which, for example, it was licit for a capitalist to invest money in a partnership (societas) with the expectation of earning a profit.[*] Eventually the exceptions swallowed the rule.
All of which leads us to the $64 question: If Noonan is right about usury, does that mean the entire Magisterium is up for grabs? But that is also a question for a another day.
Returning to the narrower question of usury, Avery Cardinal Dulles does not dispute Noonan’s presentation of “the interplay between moral teaching and the emergence of new economic systems.” but Cardinal Dulles argues that there was no “reversal of the original teaching but rather a nuancing of it.”
“The biblical strictures on usury were evidently motivated by a concern to prevent the rich from exploiting the destitution of the poor. But when capitalists of early modern times began to supply funds for ventures of industry and commerce, the situation became different. Moralists gradually learned to place limits on the ancient prohibition, so as to allow lenders fair compensation for the time and expenses of the banking business, the risks of loss, and the lenders’ inability to use for their own advantage what they had loaned out to others.
“These concessions do not seem to me to be a reversal of the original teaching but rather a nuancing of it. The development, while real, may be seen as homogeneous. In view of the changed economic system the magisterium clarified rather than overturned its previous teaching. Catholic moral teaching, like contemporary criminal law, still condemns usury in the sense of the exaction of unjust or exorbitant interest.”[†]
In this telling, as Woodyard and Marzen note, the key insight was that usury “was not defined as taking interest on a loan, but rather the acquiring of gain and profit in the situation where one did not undertake any effort or incur any expense or risk.” This definition allowed the development of modern finance once theologians and canon lawyers recognized that “most banks and commercial entities undertook some amount of risk in lending money in the era of Renaissance commerce.”
What then are we to make of Benedict VXI’s seeming revival of the condemnation of usury? Woodyard and Marzen argue that Benedict’s major point in fact was that:
“… in today's modern economic world, regulation of the financial industry is essential to protect the weakest and most vulnerable in society. It is, in essence, a reaffirmation of contemporary Catholic teaching of the preferential option for the poor, which dictates that the greatest of care must be taken for the most vulnerable in society.”
Note, however, that this does not mean one must embrace Elizabeth Warren’s view of financial regulation. Recall that, insofar as prudential judgments about the economy are concerned, Pope John Paul II emphasized that the “church has no models to present.” (Centesimus Annus ¶ 13) As the Catechism (¶ 899) thus teaches, the Church especially encourages lay initiative “when the matter involves discovering or inventing the means for permeating social, political, and economic realities with the demands of Christian doctrine and life.” There thus is a space in which those of us who are both Christians and fans of free markets may work to develop regulatory schemes that optimally protect the poor and stimulate economic growth and vitality.
I thus do not read Caritas in Veritate as changing our understanding of usury as being focused on excessive interest rates, especially “the acquiring of gain and profit in the situation where one did not undertake any effort or incur any expense or risk.”
The problem in operationalizing that insight, of course, is the difficulty of determining what is an “excessive” rate:
“When contracts appear to have very high price terms, a court could determine only with great difficulty whether the high price is due to market power or fluctuations in the costs of inputs. A high interest rate, for example, could result from the creditor's judgment about the risk of default posed by a particular debtor, and generally courts should defer to such judgments. A determination that the creditor has market power requires an evaluation of the structure of the market, a notoriously difficult enterprise usually reserved for antitrust litigation. A seller or creditor with temporary market power as a result of a patent, or some innovation that other market participants have not had a chance to imitate, should (arguably) be permitted to reap above-market returns, for that is how innovation is encouraged in a market economy.
“When contracts appear to have harsh nonprice terms, there is another reason for thinking that these terms are unobjectionable. Even if the seller or creditor has market power, it has the right incentive to supply the terms that parties desire. For example, a debtor might be willing to consent to a harsh remedial term in return for a low interest rate.”
Eric A. Posner, Economic Analysis of Contract Law After Three Decades: Success or Failure?, 112 Yale L.J. 829, 843 (2003).
Given that reality, as one of my students asked, “What can be gained by continuing to talk about usury and how it should influence individual moral decisions, even when it will only have a marginal influence on the broader society?” His answer was that “it may lead individuals as Christians to approach their business affairs with more a grain of salt, shattering what is all too often a complacency with which Christians engage in the affairs of the world and the assumptions the demands of justice do not conflict with our behaviors as workers, business people, and consumers in a capitalist economy.” He also noted that “A return to a traditional understanding on usury might provide an impetus to restore Catholic charitable civic institutions, which can provide a more Christian alternative to the corrupt institutions of a secular society.” Indeed.
[*] One of my students argued that:
The principal practical difference between a loan and an investment into a capitalist venture is the parties who are likely to be involved in such transactions. The parties making and receiving the investment are almost certainly to be relatively sophisticated businessman with some degree of financial literacy. Additionally, those investing in a business or seeking an investment are more likely to have the financial means so that the loss of an investment will not result in abject poverty.
If find that a plausible justification for the distinction, but I am not sure that that is how the Church justified the difference. In the passage from Aquinas quoted above, for example, we see a distinction being drawn between a loan—which is regarded as a transfer of ownership of the money in question—and a temporary lease of a house—in which ownership does not change hands. “For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate the house from the person to whom he has granted its use, as happens in renting and letting a house.”
[†] This understanding of usury as the “exaction of … exorbinant interest” may also be reflected in Pope Leo XIII’s condemnation of “Rapacious usury” in Rerum Novarum (1891). As has been noted elsewhere, “To condemn ‘rapacious usury’ is perhaps to indicate that there may be usury that is not ‘rapacious.’ Perhaps, given new economic conditions, there could be interest rates on loans that are not motivated by greed or excess.” The same commentator further notes that:
Leo XIII gives a clearer idea later on in the encyclical about what he might mean by rapacious usury: "The rich must religiously refrain from cutting down the workman's earnings… by usurious dealing." In this paragraph, he lays down the principle that makes usury evil. He writes, "To make one's profit out of the need of another, is condemned by all laws, human and divine.” He makes clear that rich employers must refrain from "usurious dealing" against their poor workers "because the poor man is weak and unprotected, and because his slender means should be sacred in proportion to their scantiness." Usury, then, is an evil because it deprives the poor of even the little they have earned – thus keeping them poor and beholden to their creditors. The poor must be given aid and opportunity to overcome their poverty, not loans designed to keep them bereft even of the little they could otherwise accumulate. The Church always opposed usury due to its tendency to oppress the poor.
Pope Leo XIII thus appears to be articulating a version of the distinction I advanced above between a creditor taking interest where the borrower made a profit from the use to which the loan proceeds were put and, for example, a creditor taking interest where the borrower used the loan proceeds to buy food to survive.
My thanks to Daniel Sokol for calling this paper to my attention:
Is There a Vatican School for Competition Policy? - Tihamer Toth (Competition Law Research Centre, Hungary ; Peter Pazmany Catholic University - Faculty of Law)
ABSTRACT: This paper examines whether the Catholic Church’s social teaching has something to tell to antitrust scholars and masters of competition policy. Although papal encyclical letters and other documents are not meant to provide an analytical framework giving clear answers to complex competition questions, this does not mean that these thoughts cannot benefit businessmen, scholars and policy makers. The Vatican teaching helps us remember that business and morality do not belong to two different worlds and that markets should serve the whole Man. It acknowledges the positive role of free markets, the exercise of economic freedom being an important part of human dignity, yet warns that competition can be preserved only if it is curbed both by moral and statutory rules. It is certainly not easy to find a balance between the commandments to ‘love your neighbor’ and ‘you shall not collect treasure on earth.’ I argue that market conduct that undermines business virtues should be prohibited, either by antitrust or other forms of self- or government-regulation.
Lyman Johnson organized a group of law professors including yours truly to provide comments to HHS on its rulemaking to implement the Supreme Court's Hobby Lobby decision. Lyman put together a very interesting group. Eclectic in every dimension. Protestants, Catholics, agnostics. Liberals, progressives, moderates, conservatives. All brought together by a shared respect for religious liberty and diversity.
Citation: Lyman Johnson, and Stephen M. Bainbridge, Ronald J. Colombo, Brett McDonnell, David Millon, Alan J. Meese, and Nathan B. Oman, Comments on the HHS' Flawed Post-Hobby Lobby Rules (October 21, 2014), available at SSRN: http://ssrn.com/abstract=2513620.
Abstract: In late August 2014, after suffering a defeat in the Supreme Court Hobby Lobby decision when the Court held that business corporations are "persons" that can "exercise religion," the Department of Health and Human Services ("HHS") proposed new rules defining "eligible organizations." Purportedly designed to accommodate the Hobby Lobby ruling, the proposed rules do not comport with the reasoning of that important decision and they unjustifiably seek to permit only a small group of business corporations to be exempt from providing contraceptive coverage on religious grounds. This comment letter to the HHS about its proposed rules makes several theoretical and practical points about the Hobby Lobby holding and how the proposed rules fail to reflect the Court's reasoning. The letter also addresses other approaches to avoid in the rule-making process and argues for rules that, unlike what the HHS has proposed, align with the Supreme Court's reasoning while being consonant with generally applicable precepts of state law and principles of federalism.