Article by Philip Booth in the Financial Times
Pope John Paul II – not known for utilitarian views on the market economy – once wrote that it is important for self-interest and the interests of society as a whole to be brought into fruitful harmony. Frank Field, the independent-minded Labour former minister, has expressed similar views in the context of the welfare state. Their lessons are highly relevant. Governments and regulators have distorted incentives and, as a result, the self-interest of bankers has not been in harmony with the interests of society and disaster has followed.
Nearly all financial market “busts” are preceded by monetary “booms” and this one was no exception. When central banks hold interest rates down, credit spreads become depressed, economic activity and asset prices boom and bad risks begin to look like good risks. Whether you have a moral compass or not, it becomes very difficult to distinguish between good and bad risks.
Read the full article here .
Economy and Virtue, edited by Dennis O’ Keeffe.
Catholic Social Teaching and the Market Economy, edited by Philip Booth.