Benedict XVI apparently does not understand economics. At least he has a mess in it - on the one hand, he wants a person to be at the center of the economy, on the other hand, he wants to get rid of those tools that enable the fulfillment of the first goal.
According to the Lidovky.cz server, the Pope expressed himself as follows:
"One must be at the heart of the economy. This is confirmed in the current crisis. The economy cannot be measured by maximum profit, "he said. He also rejected the "illusion of a self-regulating economy" and called for solidarity to replace the pursuit of profit.
Not if, but how
However, the question is not whether regulate, The question is how to regulate.
A completely unregulated economy is an animal economy, an economy where people do not make intellectual decisions according to their preferences.
Every human economy is regulated - by the people themselves. Each of us, by our decision, sets the boundaries of the market.
If you refuse to eat in a dirty restaurant, you state hygienic standards. If you refuse to buy low-quality trinkets for huge sums, you set quality standards. If you refuse to buy goods whose shelf life is less than any period, you have replaced the law on the minimum warranty period with your decision. If you refuse to work for a wage salary, so you just replaced the minimum wage law.
Every economy is regulated, every preference is now and here regulated by the market. In that case what a man, countless regulations.
The entrepreneur with the highest profit is then the most dignified in fulfilling these rules, the entrepreneur with the highest loss is then the worst.
The economy's us, we don't need a mechanic!
The economy is made up of people, no one else. And only people can regulate. Each economy thus de facto "regulates itself".
In some economies, preferential regulation prevails - that is regulation according to human preferences. We usually call such economies "market" economies. In others, power regulation prevails - regulation from a position of power. Today we can mostly see such an economy around us.
Power regulation consists in the fact that an interest group enforces through the state the regulation which it imposes on others against their will - from the position of power.
This will force some people to pay a higher minimum wage than they would set themselves unemployment. For some, you will impose higher hygiene standards than you would set yourself, making your money pay to meet your needs. And so on.
So while in the system of market regulation everyone creates such a regulated economy as they wish, in the system of power regulation the elite group to all others some regulation centrally enforces. It is always central, because the state is a monopoly of power, the center, let us divide it as we wish.
Central power regulation has a few flaws. Above all - as it is central - it has no competition. Because it has no competition (or potential), it is not effective.
What does it mean? That in order to ensure many regulations, we must consume far more scarce resources than we will create as many new scarce resources as we can benefit from fulfilling the regulations.
So many we artificially block precious resources to comply with central regulations, although those resources would be much better used elsewhere.
In reality, for example, this means that in order to fulfill an official's (or trade unionist's) dream of a high minimum wage, we must keep a scarce resource (labor, ie man) out of the labor market. People whose labor cost is lower than the dream minimum wage will simply be unemployed.
As a result, any central power regulation will create one structure of the economy that does not correspond to the consumer's idea (his preferences).
In practice, this means that central regulation will create a system where a large group of people will be artificially kept unemployed and the center (state) will take more and more money from their wages to compensate the involuntarily unemployed. Not only do those who earn the least earn even less than before the minimum wage.
At the same time, we have a group of people who receive money for nothing and a group of people who have to pay it for "nothing". We have entrepreneurs here who have to pay their employees' wages without being able to demand any output from them.
"Matching consumer preferences" is then fundamental properties system of market regulation, because it is the preferences that make up this system. AND each of us is a consumer.
The system of central regulation has another significant flaw - moral hazard. The center determines the regulation - it decides, but does not bear the costs (impacts of its decision). The center bears no responsibility. The center will logically create more expensive regulations than necessary.
That inefficiency is not only a possible impact of the absence of competition, inefficiency is also a fundamental feature of the system power regulation.
It is precisely the system of power regulation that creates an environment where profit can be created not by fulfilling human desires and wishes, but subordination to an officialwhich regulates my competition.
This hazard is not in the system of market regulation. If we decide to "regulate our labor market" by setting as our possible minimum wage, for example, CZK 100 per month, then we bear the consequences of our actions - we then bear potential unemployment ourselves.
A little mess
Not only is there no economy that does not regulate itself, but if the center of the economy is to be human at the same time, we must enforce an increasing share of market regulation in our economy, to the detriment of power regulation.
Benedict XVI then made a special statement. If he wants a person to be at the center of the economy, then it needs profit and losswhich tell us all how good we are at fulfilling that person's rules. I need exactly the profit that the pope is damning. Apparently His Holiness has a bit of a mess in that.
As he said Murray Rothbard: “It is not a crime to be ignorant of economics; after all, it is a specialized discipline that is, moreover, considered by many to be a 'gloomy science'. But it is absolutely irresponsible to shout out loud opinions on economic issues, I am in this state of ignorance. "