CST Economics: Prudential Considerations

Our Lord taught that "You always have the poor with you ...." Even so, Catholic Social Teaching commands that we have a preferential option for the poor. Yet, as I understand CST, it leaves many of the policy decisions relevant to how we ameliorate the status of the poor to prudential judgment rather than magisterial teaching.

In making those prudential judgments, we need to consider a new Swedish study - reported at OpinionJournal.com - assessing the relative merits of European-style social democracy versus Anglo-American democratic capitalism.

The growing split between the U.S. and Europe has been much in the news, mostly on foreign policy. But less well understood is the gap in economic growth and standards of living. Now comes a European report that puts the American advantage in surprisingly stark relief.

The study, "The EU vs. USA," was done by a pair of economists--Fredrik Bergstrom and Robert Gidehag--for the Swedish think tank Timbro. It found that if Europe were part of the U.S., only tiny Luxembourg could rival the richest of the 50 American states in gross domestic product per capita. Most European countries would rank below the U.S. average, as the chart below shows. ...

Higher GDP per capita allows the average American to spend about $9,700 more on consumption every year than the average European. So Yanks have by far more cars, TVs, computers and other modern goods. "Most Americans have a standard of living which the majority of Europeans will never come anywhere near," the Swedish study says.

But what about equality? Well, the percentage of Americans living below the poverty line has dropped to 12% from 22% since 1959. In 1999, 25% of American households were considered "low income," meaning they had an annual income of less than $25,000. If Sweden--the very model of a modern welfare state--were judged by the same standard, about 40% of its households would be considered low-income.

In other words poverty is relative, and in the U.S. a large 45.9% of the "poor" own their homes, 72.8% have a car and almost 77% have air conditioning, which remains a luxury in most of Western Europe. The average living space for poor American households is 1,200 square feet. In Europe, the average space for all households, not just the poor, is 1,000 square feet.

Many who claim to be in the mainstream of CST seem to prefer European social democracy to Anglo-American democratic capitalism. In light of this study, they have a lot of explaining to do. Personally, it makes me feel a lot better about being on the neo-conservative "fringe" of CST.