Is it possible to spend our way out of a global financial crisis that was sparked, at least in part, by the overspending that resulted from lax credit policies?
The Vatican isn’t persuaded this is necessarily the best approach.
Many participants at last weekend’s G-20 meeting of global leaders advocated increased spending as the key to overcoming the international financial crisis.
Underlying this approach is a belief that more money needs to be pumped into consumers’ hands by governments, in order to spur a resurgence in spending and consumption to prevent a slide into a deep global recession.
An article in the Nov. 17 issue of the Vatican newspaper L’Osservatore Romano expressed skepticism about this philosophy.
“Too many so-called experts are telling consumers ‘the infallible remedy for overcoming the risk of poverty caused by the economic crisis under way’ is to ‘spend, consume and go into debt to keep the economy going,’ said the article in L’Osservatore Romano,” CNS reported. “But, the Nov. 17 article said, basically what those people are saying is that ‘to overcome the crisis it is necessary to continue the same behavior that provoked it, that is consumption and indebtedness.’”
The L’Osservatore Romano article was written by Italian banker Ettore Gotti Tedeschi, a professor of financial ethics at the Catholic University of the Sacred Heart in Milan.
Tedeschi said people ought to be confused and wary when the same authorities who encourage them to keep spending warn that “a recession is under way and the worst is yet to come.”
Asked Tedeschi, “Is it better, then, to consume to keep up demand or to save knowing that difficult times are ahead?”
— Tom McFeely