The Need for ‘Catholic’ Economics
April 8th, 2010If ever there was a better argument made for opposing finance and monopoly capitalism and introducing distributist economic principles into our national life, I haven’t seen it. If you’re a Catholic Tea Partier concerned about concentrations of power in the hands of elites, stop looking at government and start looking at a rapacious capitalist system that is rapidly sifting us into a few have’s and a vast population of have not’s. That’s where the real imbalance in American life and power lies.
“The Christian Doctrine of man is intrinsically bound up with the problem of property.There are three possible solutions of the problem of property. One is to put all the eggs into a few baskets, which is Capitalism; the other is to make an omelet out of them so that nobody owns, which is Communism; the other is to distribute the eggs in as many baskets as possible, which is the solution of the Catholic Church.” Archbishop Fulton Sheen, “Introduction to Christian Social Principles”
From “Of Two Minds,” the blog of Charles Hugh Smith
The Stock Market as Propaganda
Since 91% of stocks are owned by the Plutocracy, the much-ballyhooed rise in the stock market as proof the recession is over is perception management/ propaganda.
The 75% rise in the stock market from its lows a year ago is ceaselessly offered as “proof” the economy is recovering. Too bad very few Americans are drawing any benefit from this stupendous rise. As I detail below, the Great Middle Class owns at best only 7% of all stocks and mutual funds.
So the constant, breathless heralding of the stock market’s carefully manufactured ascent has only one purpose: to create perceptions of “recovery”and distract the populace from the fact that in terms of employment and tax revenues, the U.S. economy is still shrinking rapidly.Let’s begin with the facts presented in the Wealth, Income, and Power website (G. William Domhoff).
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2009).
In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America. (end of excerpt)
Here is a chart from the website:
According to the asset class breakdown on Wealth, Income, and Power, the bottom 90% owned 18.8% of all stocks and mutual funds in 2007. Since the bottom 60% own very little (only 22% of the bottom 60% own stock/mutual funds worth more than $10,000), and the bottom 80% own a mere 8.9% of all stocks/mutual funds, then the top 10% owns 81% of all stocks (of which the top 1% own 38%) and the “managerial/professional” slice between 80% and 90% owns about 10%.
Some 47% of the “middle class” (those between the bottom 40% with few financial assets and the top 20% with the vast majority of the assets) own stocks/mutual funds worth more than $10,000, but since the bottom 80% own a mere 8.9% of all stocks, it seems the Great American Middle Class owns about 7% of all the stocks and mutual funds in the U.S. (with the bottom 40% holding the remaining 2%).
According to BusinessWeek, the profits of the S&P 500 corporations rose in 2009 to over $500 billion–a vast sum presented as “yet more proof” that the recession is over.
Over for some perhaps, but not for the bottom 80%. It is no secret that the spurt in productivity which fueled those gargantuan profits was made by reducing headcounts and getting more work out of the remaining workforce. Bully for the S&P 500 managers and those who reap the profits.
Since there are about 130 million U.S. households and total corporate profits are around $1 trillion, we can do some simple math to see where all those profits flow.
If you dig through the BEA website and other sources, you find that Corporate profits were about 13 percent of GDP in 2007, their highest level in 40 years and significantly above the post-World War II average of 9.4 percent of GDP. Nonfinancial profits for 2006 were $1.08 trillion. Real GDP peaked in Q2 2008 at 13,415.3 billion; in Q3 2009 GDP was 12,973 billion (calculated annually).
Even assuming corporate profits have dropped back to 9% of GDP, we still get a number around $1 trillion in profit for 2009.
Based on the ownership of stock and mutual funds, we can estimate that 9% ($90 billion) of all that profit flowed to the bottom 80% of households (104 million), $100 billion flowed to the 13 million Managerial/Professional households (the 10% of all households between 80% and 90%), and $810 billion flowed to the top 10% (13 million households), of which $400 billion flowed to the top 1% (1.3 million households).
Since total household income runs about $9 trillion, then the $90 billion distributed among 104 million households doesn’t really ring a lot of chimes when the estimated loss of wealth in the U.S. as the credit bubble popped has been estimated at $15 trillion.
The rise in the stock market and corporate profits benefitted the relative few–yet is touted in the mainstream media as heralding the end of the recession for the entire nation. That is pure propaganda. How easy it’s been to manufacture a rising stock market, compared to engineering a recovery in the economy.
Indeed, the biggest problem facing the manipulators is the lack of participation by the professional and middle classes which have steadfastly kept their cash in money-market funds ($3 trillion) and put money in “safe” bond funds (about $350 billion went into such funds in 2009) while they withdrew money from the stock mutual funds.
The Grand Game has always been to engineer a rising stock market, sell to the middle class suckers and then go short, making a fortune as the bubble pops and the middle class loses the “sure bet.”
Now that the middle class isn’t responding to the endless propaganda about how great the stock market is doing, then the Powers That Be are forced to trade between themselves–hence the low daily volume and high-frequency trading.
The stock market isn’t about building middle class wealth, and the middle class seems to have finally figured that out. The equity market is all about concentrating wealth and managing perception: if the top 10% is doing well, then the bottom 90% are supposed to feel better about the whole thing, too, even if they are poorer by every financial metric.


Thirteen years ago this evening, I was received into the Catholic Church in a brief but beautiful ceremony during the Easter Vigil Mass. In one fell swoop, I received the Sacrament of Confirmation and made my public profession of fidelity: “I believe and hold to be true all that the Catholic Church proposes and teaches.” Then, within a few moments I encountered my Lord for the first time in the Sacrament of the Eucharist. The gifts I had received from my wonderful, faithful parents decades earlier - an intimate knowledge of Jesus Christ, an ingrained appreciation for the the Scripture, and a thoroughly Christian world-view - reached their full flower in a matter of moments. Meanwhile, in a touchingly sad commentary on the continuing disunity of the the Body of the Christ, my mother, the finest Christian I know, sat weeping in the second pew, bewildered by what to her appeared to be a tragedy, a loss.
Morning. 6:00 am
You awoke today just a few miles from the city, in the village of Bethany, near the home of your friends Mary and Martha, and their father Lazarus. You could have stayed with them, as you had so many times before, but you chose to spend the few days before Passover in the relative discomfort of Simon’s little hovel on the edge of the village. Simon, that simple saint, who still bears the marks of the leprosy that once ravaged him … Simon was so happy to repay your healing love with what hospitality he could muster. The others much prefer the comforable pillows and hot food at Mary and Martha’s place, but as usual they have so much to learn.
Having spent 36 days reflecting on a few of the manifold graces I’ve known as a Catholic Christian, I cannot allow Lent to pass without noting and offering some thoughts on the sexual abuse crisis that is once again afflicting the Catholic Church.
Moving deeper now into Holy Week. My own words are beginning to fail, so I thought I’d offer for your reflection the following excerpts from some favorite spiritual classics. The topic is humility, my personal stumblingblock, but a challenge to every man or woman who would follow Christ. We’ll start with an excerpt from Humility of Heart, by Fr. Cajetan Mary da Bergamo:
My journey into the Church began in late 1989 and continued for nearly seven years, until the Easter Vigil 1997, when I was reconciled. During most of that time I traveled alone, without the benefit of any Catholic intimates, much less the direction and guidance of a priest or religious. In fact, I didn’t make my first real “Catholic friend” until 1995, and then only as the result of an odd coincidence in a professional setting. (That friend introduced me, in turn, to a holy priest who eventually persuaded me to take the final step across the Tiber.)