DRI-287 for week of 8-31-14: The Hollywood Blacklist as an Economic Phenomenon

An Access Advertising EconBrief:

The Hollywood Blacklist as an Economic Phenomenon

Very few people will ever develop an econometric model. Even fewer will use abstruse mathematics to formulate economic theory. A larger subset of the population is called upon to interpret the output of these economic tools, but this group is still microscopically small. To pinpoint the practical value of an economic education, we will have to look elsewhere.

Economics should enable us to understand the “blooming, buzzing confusion” of our daily life, to borrow the characterization of a 19th-century historian. Indeed, the great historical questions of yesterday should yield their mysteries to basic economic logic.

No economic exercise is as deeply satisfying as the parsing of a great historical dispute or debate using economics. When this exercise overturns the conventional thinking, it is one of life’s most exhilarating moments.

The famous Hollywood Blacklist is a ripe subject for this economic treatment.

The Blacklist as Portrayed by the Political Left

The stylized portrayal of the Blacklist by the political Left begins in the 1930s, when numerous actors, actresses, screenwriters and other rank-and-file motion-picture personnel were strongly attracted by the tenets of socialism and Communism. Indeed, for many Communism was the practical embodiment of socialism. This attraction led them to participate in rallies, join organizations and make contributions in kind and in cash to the socialist and Communist movements. Some even joined the Communist Party, but these were mere flirtations, more emotional than intellectual. Almost all of these Party memberships were short, transitory affairs that, however, would later come back to haunt the participant.

Even the biggest movie stars were contractual employees of the big movie studios. The operational heads of the studios, moguls like Louis B. Mayer of Metro Goldwyn Mayer, Darryl F. Zanuck of Twentieth Century Fox and Harry Cohn of Columbia Pictures, were fanatically dedicated to the profits returned by their movies. This led them to take an unseemly interest in the private lives of their actors and actresses, even to the point of influencing the stars’ marital, pre-marital and extra-marital pursuits. The moguls feared that unfavorable publicity about a star would destroy his or her box-office value.

After World War II, American attitudes toward the Soviet Union underwent a reversal. The public became inordinately fearful of Russia and of Communism. This wave of emotion was typical of a country that was governed by a chaotic, competitive spirit rather than by a tightly regulated bureaucracy run by left-wing intellectuals, or what the radical economist Thorstein Veblen had called a “Soviet of engineers.” The same spirit had made America society racist (anti-black, anti-immigrant) and sexist (anti-woman). Now it had become “anti-Communist,” which was the same thing as anti-intellectual, anti-democratic and fascist. After all, the Fascists and Communists had opposed each other in the Spanish Civil War prior to World War II, hadn’t they?

This inordinate fear was exploited by Senator Joseph McCarthy of Wisconsin, who used his government investigative committee as a tool to further his political career by pretending to expose Communists operating in government and virtually every other nook and cranny of institutional America. The Left originated the term “McCarthyism” and used it as shorthand for the Cold War anti-Communist mentality and all its representations.

The moguls were less interested in anti-Communism as a political project than for its financial implications on their industry. They feared that the public would associate the left-wing sympathies of their actors, actresses and screenwriters with Russian Communism. This potential linkage threatened studio profits.

Thus was born the Blacklist. The moguls commissioned their sycophantic underlings and outside organizations, such as the newsletter Red Channels, to provide lists of Hollywood artists who were current or former Communist Party members. Those on the list were blacklisted – they could no longer work. The lists were compiled partly by offering an inducement: Those “naming names” of other current or former Party members would be spared punishment. The question “Are you now or have you ever been a member of the Communist Party?” became associated with the House Committee on Un-American Activities and McCarthyism in general.

The Left saw the dilemma faced by witnesses testifying before security hearings as a Catch 22. A witness admitting current or former Communist Party membership would subsequently be blacklisted. A witness refusing to “inform” on his friends and/or colleagues would also be blacklisted. A witness citing his or her Fifth Amendment right against self-incrimination as justification for a refusal to testify would be blacklisted. But a witness who testified and named names could work only at the cost of eternal damnation – by universal understanding, the most despised and despicable of all human beings is an Informer.

Thus, the Blacklist is pictured as an intellectual Dark Age, a dark night of the American soul. Some blacklistees (John Garfield, J. Edward Bromberg) were so traumatized by their plight that they died from the stress. Others (Larry Parks) suffered permanent destruction of their careers. Most (Lee Grant, Dalton Trumbo, Carl Foreman, Marsha Hunt, Michael Wilson, Jules Dassin) lived in literal or figurative exile for one or two decades, suffering financial reverses and emotional isolation. A few (Edward G. Robinson) coped with a quasi-blacklist (“greylist”) that produced similar but less severe effects.

The Blacklist hovered like a great plague over the land for many years until it finally ended suddenly in the early 1960s. The heroic Kirk Douglas (or, in some retellings, the heroic Otto Preminger) openly hired long-blacklisted screenwriter Dalton Trumbo, thus breaking the back of the Blacklist.

The Blacklist as Seen Through the Lens of Economics

If the left-wing tale of the Blacklist has a fairy-tale quality, that is apt. Despite the acceptance and even reverence with which it is treated, it makes little sense. The principals behave in unreal ways, unlike actual human beings impelled by rational motives. The portions of the story that are correct are woefully incomplete. The rest is inaccurate. Most misleading of all is the complete absence of economic logic from the tale.

America’s “inordinate” fear of Communism. To be sure, fear is a prime mover of human action. But fear is conditioned and shaped by our rational understanding of the world around us. After World War II, the Soviet Union’s public face was rapidly transformed. Russia blockaded Berlin. It invaded or formally occupied Eastern Europe. After a few years, it acquired nuclear weapons that it pointed at the U.S. It aided its client states in the export of Communism throughout the world and indirectly fought the U.S. by aiding North Korea against South Korea. Eventually, the confluence of all these actions resulted in the term “Cold War.”

We know now what we strongly suspected then – that the Soviet Union had unleashed the worst campaign of mass murder in human history during the 20th-century’s first half. Joseph Stalin supervised the killing of more Jews than did Adolf Hitler and killed more of his own citizens than did the Nazis in wartime. We also know that the America Communist Party was the Soviet espionage apparatus in the U.S.

Given all this, the fear of Soviet Russia does not seem “inordinate.” Moreover, the actions of the Communist Chinese subsequent to the fall of Nationalist China in the late 1940s validate the fear of Communism generally. Red China did not export terror and death to the extent that Soviet Russia did. But their murderous reign within China itself surpassed even Stalin’s butchery.

In this light, the American reaction against Communism seems mild and tentative. And indeed we know that prior to the accession of Ronald Reagan to the Presidency in 1980, the Cold War was all but lost. While the American public displayed a well-founded a prophetic fear of Communism, our intellectual elites showed a shocking indifference to it. This began with the attempts by the Truman administration to cover up the discovery of high-level Communist penetration of the U.S. State Department and continued with the friendliness shown to Communist dictators by the American intelligentsia and to Marxist ideology by the American academy. Marxist economics has long exceeded free-market economics in popularity at American universities. Mainstream economics textbooks, notably the best-selling Economics by Nobel laureate Paul Samuelson, touted the superiority of Communist central planning to American free markets in promoting economic growth right up to the day when the Soviet Union collapsed.

Time after time, the American public’s fear of Communism was validated while the American elites’ acceptance of it was not.

The Moguls and the Blacklist. The Left portrays the Hollywood Moguls as craven cowards because they were profit-motivated. Of course, when those same moguls occasionally dabbled in politics without a business rationale, the Left excoriated them for that as well. This leads us to suspect that the Left simply approved of the Communist sympathies of the blacklistees.

Left-wing intellectuals criticized corporations in the 1930s for putting the interests of executives ahead of shareholder and consumer interests. Yet here the moguls are criticized for doing just the opposite. Using the Left’s own premise – but applying it within the model of economic logic – the moguls were safeguarding the interests of consumers and shareholders when they instituted the Blacklist.

The movie moguls developed – or, more accurately, stumbled upon – the “star system” of moviemaking as a way of stimulating movie attendance by focusing their attention on movie stars. This system worked so well that in the 1930s and 40s, average weekly movie-theater attendance approached the population of the entire country. (Today it languishes at 10-15% of U.S. population.) The leading actors and actresses may have been salaried employees, but they were the best-paid people in the nation – behind only the moguls themselves.

The appeal of the stars rested on the image they projected. Of course, audiences knew that Clark Gable was not really a reporter or a British naval officer and Errol Flynn was not really a pirate or a medieval aristocrat-turned-rebel-bandit. But they believed that the roles were extensions of the stars’ true personalities – Gable’s as a straightforward, aggressive male and Flynn’s as an irresistible cavalier. Ditto for Gary Cooper as a man of few words and James Stewart as hesitant and bashful.

In order to keep their profit machine humming, the moguls inserted morals clauses in studio contracts allowing termination for “moral turpitude” or anything that would destroy the good will vested in those personalities. From the standpoint of consumers – and therefore from the standpoint of shareholders and the moguls as well – a movie star was a product consisting not wholly but largely of image. A mogul that ignored the image projected by a star would have been derelict in professional duty.

Communism was a label that threatened a studio’s brand just as (for example) genetic modifications affect the brand of certain foods today. The comparison is apt. Communism was a genuine threat, regardless of whether or not any actor or actress really ever espoused Communist doctrine. Genetic modification, on the other hand, is a bogeyman whose dangers are illusory. But in both cases, the relevant consideration was and is what consumers think rather than objective truth. Consumer beliefs, truth aside, will govern their actions and the marketplace outcome. Consequently, moguls must act on their perception of what consumers perceive.

The moguls accurately judged that any actor or actress linked to Communism would be box-office poison, as would any writer whose words were being spoken on screen. Therefore, they had to purge their industry of Communists and suspected Communists – and do so in the most visible way possible. After all, any executive could, and presumably would, say that there were no Communists working for him. But the Blacklist was an exercise in product labeling – just the sort of thing that the political Left likes and even demands from corporations. The moguls were trying to obtain independent certification that their motion-picture product was “Communist -free.” Audiences could safely admire the actors and actresses appearing in it; they could safely consume the spoken and visual content contained within it. If the moguls had been selling apples, the Left would surely have admired the energy and determination devoted to preserving the purity and wholesomeness of the product.

But since we were talking movies, the Left was outraged by the Blacklist.

The Blacklist helped usher in an undemocratic reign of terror in America. Nothing prevented the dozens of competing movie studios and independent movie producers from advertising their movies by saying “we employ Communists and former Communists” or “we cast Fifth-Amendment-takers in our productions.” If the public was indifferent to this or even pleased by the idea, they could have flocked to these competing movies and enriched the maverick studios and producers. Of course, that didn’t happen because the public held no such beliefs. The moguls were neither craven cowards nor undemocratic tyrants. They were doing exactly what producers are supposed to do in a free market and what the Left criticizes producers for not doing: catering to consumers by insuring the quality of their product, thereby catering to shareholders by safeguarding profits.

The Blacklist was undemocratic and unfair because it denied blacklistees the means of earning a living. This is completely untrue. At worst, blacklistees were denied the ability to work in Hollywood productions. That is, they were denied the same thing that actors and actresses are denied when they are not cast and writers are denied when their scripts are rejected – which is the fate of the overwhelming majority of all actors, actresses and writers. In this case, the denial was figuratively stamped “unsuitable due to Communism.” This was a subjective evaluation, just as all rejections are subjective. Of course, the particular artist involved will take the blow hard and view it as unfair – just as all rejects do when consumers prefer the work of somebody else.

At all events, the so-called “victims” of the Blacklist were not denied the “right to work.” Movie actors went abroad and worked. Michael Wilson and Dalton Trumbo wrote Oscar-winning scripts submitted under false names while working and earning income abroad. Other blacklistees worked on Broadway or on television. And of course, nothing prevented them from – hold on to your seats here – getting an ordinary job and earning an ordinary living instead of earning thousands of dollars per week in Hollywood while the average American wage was less than five thousand dollars per year. Indeed, from among the few hundred documented Blacklist cases, it is often difficult to sort out those people whose Hollywood careers were ended by the Blacklist from those whose careers petered out naturally. In Hollywood as in professional sports, the average career is short though often sweet.

Among the victims of the so-called “greylist,” Edward G. Robinson made 13 movies during the short time period when he was allegedly greylisted. All but one of these was for American studios, mostly major ones. Of course, his roles were not necessarily plum ones, but that was certainly because his career was declining both before and after the Blacklist. For those whose career proved disappointing, claiming victimization by the Blacklist has provided compensation for the recognition fate denied them and an excuse for failing to justify their own expectations of success.

The Blacklist was evil because McCarthyism itself was evil and threatened America with dictatorship. We have shown that, far from being evil, the Blacklist was a product of free-market economics at work. The Left excoriates free-market economics when it fails – or supposedly fails – then turns around and excoriates it for succeeding while correcting its supposed errors. But even more ridiculous is the fact that the Hollywood Blacklist – today almost always linked with McCarthy and McCarthyism even by those caught in its toils – had nothing whatever to do with Joe McCarthy.

Senator Joseph McCarthy was elected to the Senate from Wisconsin in 1946. But he was virtually unknown to most of America until he made a speech in Wheeling, West Virginia in 1950. The speech concerned Communists that McCarthy alleged to reside in the U.S. State Department, not in Hollywood. And throughout McCarthy’s subsequent career, Communists in Hollywood were not an issue raised by McCarthy. McCarthy’s Senate Committee was Government Operations, not too surprisingly in view of his preoccupation with Communists in government. The government committee most often concerned with Communists in Hollywood was not even in the Senate – it was the notorious House Committee on Un-American Activities (HUAC).

Hollywood Communism made national headlines in 1947 when the so-called Hollywood Ten were called to testify before HUAC. These were a group of actors, writers and directors who were known to be current or former members of the Communist Party. They included now-famous names like writer Dalton Trumbo and director Edward Dmytryk. In his memoir Odd Man Out, Dmytryk confirms that all of the Hollywood Ten were indeed current or former Party members. He recounts how the appearance of the Ten before Congress was orchestrated by the Party and how non-Communist Hollywood liberals like Humphrey Bogart, Lauren Bacall, Gene Kelly and Danny Kaye were duped into supporting the Ten. The Party line was that the Ten were exercising their First Amendment rights of free speech and free association. After all, Communist Party membership was legal.

But when the hearings began, Dmytryk was astonished to find that the Ten uniformly pleaded their Fifth Amendment right against self-incrimination to avoid answering questions and having to name names. Their testimony consisted of diatribes against the Committee in a Communist-Party vein. This episode reinforced Dmytryk’s resolve to quit the Party and sever his ties with his Leftist colleagues. His refusal to name names led to a prison sentence for contempt of Congress, after which Dmytryk emerged one year later to testify again and salvage his career by naming the names of his Party colleagues.

In 1947, McCarthy sat in Congress but was uninvolved in the Hollywood Ten episode. He played no part in the Hollywood Blacklist. By the time McCarthy delivered his Wheeling speech, the Blacklist had already been established. McCarthy played no part in it; he was concerned with security risks in government (the State Department) and the military (the Army). McCarthyism, whatever it was or meant, was a phenomenon of the 1950s, while the Blacklist was the outgrowth of the Cold War security debates that began in the 1940s.

McCarthy is notorious today for claiming that large numbers of Communists were employed in government without naming any names. (“He never produced a single Communist.”) As is usually the case, the Left is wrong. McCarthy did name names and was usually right about those he named, such as Owen Lattimore. He also named numbers, but the numbers did not refer to those currently employed but rather Communists known to have operated within government. We know now that substantial numbers of Communist agents operated within the State Department, for example, and the exact number is not of paramount importance today because we are still uncovering more. All this is irrelevant to the Hollywood Blacklist.

The Blacklist was evil because (a) the blacklistees were never Communists (b )the blacklistees had every right to be Communists and still remain employed in Hollywood (c)anti-Communism was evil by definition (d) choose any one or all of the above. Perhaps the most amazing facet of the Left’s portrayal is its fuzziness. When discussing blacklistees like Larry Parks, the Left implies that all blacklistees were innocent victims who were selected at random by Red Channels or victimized by John Wayne, Ward Bond or an anonymous grudgeholder. It is true that fellow actors at the Motion Picture Alliance, including stars like Wayne, were involved in the interviews prepatory to blacklisting. By blacklisting a fellow performer, MPA officials might leave themselves open to a charge of thinning the ranks of their competition. But every blacklistee was a potential employee of the studio; this was the opportunity cost incurred by the moguls. They had no incentive to be randomly vicious or inaccurate, since they were cutting their own throats by doing so – and the object of the exercise was to preserve their profits, not squander them. Presumably, this is why prospective blacklistees were always given an out, either by naming names or by pleading innocence with sufficient eloquence. This latter course was taken by various stars, including Lucille Ball and James Cagney.

The Left has gotten a lot of mileage out of the implication that the blacklistees were all, or mostly, innocent. But the problem is that this does not imply that the investigations of Communist infiltration of Hollywood were wrong; it implies that there was not enough investigation. Even if the moguls had done nothing, if Red Channels and the MPAA had never existed, the American public’s well-founded fear of Communism would have remained. The investigations did not convict innocent people of being Communists; they gave people under suspicion the opportunity to absolve themselves. Those who seized the opportunity – e.g., most people involved – emerged better for the process.

When the subject changes to avowed Communists like Dalton Trumbo, the Left abruptly changes its tune to focus on the unfairness of denying the writer his right to write, to earn income, support his family, etc. But what the Left is defending is not a right but rather Trumbo’s power to force people to hire him when his qualifications for hire no longer pass muster. While Trumbo would have protested that he was still the same writer he always was, the truth was that his qualifications did not consist solely of his writing talent. He also had to be free of moral taint. Would the Left defend O. J. Simpson’s “right” to work as an actor today even after a civil conviction for murder? Would they have defended Lord Haw Haw’s right to remain employed as an announcer after he worked for the Nazis in World War II?

Indeed, suppose the word “Communist” in the entire Blacklist controversy were to be replaced by the word “Nazi” – would the Left still take the same anti-blacklist position? Of course, we all know that the answer to that question is “no.” Right-wing writers like Ayn Rand and Morrie Ryskind were subjected to the Left’s own Blacklist after they objected to the Communist penetration of Hollywood. In the ensuing years, nobody on the Left has come to their defense.

The Blacklist killed blacklistees. The few blacklistees who died, including John Garfield and J. Edward Bromberg, had pre-existing medical conditions. (Garfield’s heart condition exempted him from military service in World War II.) Medical science lacks the capability of assigning causation to an external event like the Blacklist, which is one of many potential stressful events that might or might not contribute to death.

The overarching question, though, is why any moral opprobrium should attach to the Blacklist. The moguls had no incentive to kill Garfield or Bromberg. If nobody intended to cause the deaths, then the Blacklist is like any other stressful event. All kinds of morally innocuous actions might conceivably result in a death without adversely transforming the character of the action.

The Blacklist was an anti-competitive cartel. Intriguingly, this argument was advanced not by the Left but by free-market economist Milton Friedman in his book Capitalism and Freedom. Its problem is that it fails to distinguish between actions taken simultaneously and those taken in concert. To use the O.J. Simpson case again, it is obvious that Simpson became unemployable the moment he killed Nicole Simpson. Hollywood moguls did not need to collude to achieve that outcome. The same is true of the Hollywood Blacklist. If simultaneous actions taken to insure product quality are “collusion,” then the word has been distorted beyond all semblance of meaning.

The Blacklist was not destroyed by the heroic actions of Kirk Douglas or Otto Preminger in hiring Dalton Trumbo (to write Spartacus or Exodus, respectively). The Blacklist was already a dead letter by 1960, then these movies were produced. It was killed by the death of anti-Communism, which died when Joe McCarthy was discredited during the Army-McCarthy hearings in 1956. If Douglas or Preminger had hired Trumbo in 1953, that would have been courageous. But they didn’t because – at that point – it would also have been suicidal.

Forcing witnesses to inform to keep their jobs is immoral. The injunction against informing is the heart of the criminal code. (It is even the title of a cult-movie classic from 1931, Howard Hawks’ The Criminal Code.) Without informing, police would be unable to solve most criminal cases; even with the sophisticated technology aired on television shows like CSI, the solution of most crimes depends on confession and prying information out of witnesses. The technique of threatening knowledgeable parties with sanctions in order to induce testimony is perhaps the most venerable – and successful – of all police techniques.

The position taken by the Left aligns it perfectly with the criminal element, which tries to preserve collusion between criminals against the substantial inducements for confession. It is those economic incentives that persuaded Dmytryk and others, such as director Elia Kazan and actor Lee J. Cobb, to relent and name names.

It is unfair that people should be held accountable for past actions that led to unforeseeable consequences such as blacklisting. When people publish embarrassing photos or posts about themselves on the Internet, they give hostages to fortune. Yet the prevailing sentiment today seems to be that they should have known better. If anybody should have known better, it was Hollywood actors with morals clauses in their lucrative contracts. Communism was both controversial and popular in the 1920s and 30s. During World War I, the “Palmer Raids” had set a precedent for government interference with the exercise of a right to practice Communism. Yet an illusion of invulnerability and messianic notions of social responsibility persuaded countless Hollywood figures that their moral duty lay in following the red star of Communism.

If people choose to offer sympathy for former Communists, that is their business. Most of the original editors of the conservative magazine National Review were former Communists. They rebuilt their lives despite this youthful misstep by forcefully changing direction and repudiating their past. That is exactly what too many Hollywood Communists were unwilling to doand that is why we owe them no sympathy, just as we owe their arguments no respect.

DRI-180 for week of 12-22-13: Render Unto Caesar: A Response to Pope Francis’s Denunciation of Capitalism

An Access Advertising EconBrief:

Render Unto Caesar: A Response to Pope Francis’s Denunciation of Capitalism

Papal exhortations to the faithful typically receive dutiful press coverage, but seldom create firestorms of controversy. Pope Francis’s recent apostolic exhortation is a historic exception. It is universally characterized as a “denunciation of capitalism.” Popes are not esteemed for the cogency of their economic commentary, but the Pope has become the darling of the political Left for the extravagance of his views – at least, those excerpted in print, broadcast and digital media.

Historically, Catholic doctrine is hostile to commerce and finance, so we should not be stupefied by papal adherence to tradition. Still, ascendancy of the Pope’s remarks to a position of dominance in public discourse suggests the extremity of the views expressed. They merit extensive examination – and reply. The paragraphs most often excerpted are numbers 53-60, from which the following have been taken:

“…We have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not news when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by while food is thrown away while people are starving? This is a case of inequality. Today, everything comes under the laws of competition and the survival of the fittest where the powerful feed upon the powerless…”

“…People continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting… A globalization of indifference has developed… we end up being incapable of feeling compassion at the outcry of the poor… as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us…”

“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This… is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. ..they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born… Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion… a deified market …becomes the only rule.”

Was the Pope Mis- quoted/translated/interpreted?

In the conservative fortnightly National Review, longtime theologian and analyst Michael Novak tries to make the case that Pope Francis did not really mean what he apparently said. Novak finds the phrase “trickle-down” suspect, claiming that it does not appear in the original Spanish version of the apostolic exhortation. Thus, it must have been added by somebody in the translated version used as the basis for excerpts by the American news media.

Novak recalls Pope Francis’s background in Argentina, a land recently dominated by “crony capitalism;” e.g., government favoritism extended to business friends of those in power rather than truly free markets governed by the Rule of Law. Surely this must be the “capitalism” that the Pope is excoriating, Novak declares.

Novak’s case has a certain visceral appeal, particularly in its indictment of the appellation “trickle-down,” which is left-wing code language used to discredit tax cuts. Alas, the Pope’s own clarification of his comments, published in Time Magazine, offers no support to that interpretation. Not only does he fail to repudiate or qualify his use of the term “trickle-down,” Pope Francis expands on his earlier exposition with remarks couched in the same vein.

Pope Francis’s statements are neither factual nor analytical. They do not spring from any empirical foundation or develop a logical chain of reasoning. They are the kind of ad hoc, emotive outpouring long associated with the political Left. Thus, it is not surprising that Rush Limbaugh characterized them as “pure Marxism,” despite the absence of any Marxist trappings (surplus value, alienation, class conflict, etc.) or call for revolution.

The immediate reaction to these statements is shock at their utter, blatant falsity to fact and history. Even a non-economist recognizes instantly that the Pope – or his ghostwriter – is simply regurgitating prefabricated sludge with no intellectual or empirical content and no relationship to reality. Consider only those comments excerpted above, for example.

A Direct Rebuttal to Pope Francis

We can safely assume that Popes operate on a plane of existence utterly dissimilar to yours and mine. This presumably applies even to Francis, who is portrayed as humble and constantly in search of opportunities to interact with ordinary people. Yet if he were really in touch with day-to-day reality, he would surely know that it is indeed “news” when “an elderly homeless person dies of exposure.” In America, such events are the stuff of the nightly news, local and national, broadcast, telecast and online. So are stock-market fluctuations. This is not surprising; both events are the stuff of human drama. Roughly half of all Americans have a relatively direct financial interest in the stock market. That includes the “majority” that Pope Francis contrasts with the “happy few” in the “minority” whose earnings are “growing exponentially.” It is one thing to hear “outcry of the poor” – or claim to – but another thing entirely to heed it by contributing concretely to their welfare. Research shows that the predominant contributors are the very people that Pope Francis stigmatizes, the holders of financial assets who monitor their value and nurture it.

This represents the intellectual quality of the Pope’s statement well – a false dichotomy built upon an empirical falsehood, tending to create an impression that is the opposite of the truth, couched in rhetoric drenched with emotion.

If “such an economy kills,” how do we explain the soaring life expectancies during the 20th century? In particular, what do we make of the fact that the least free countries – Soviet Russia and its contemporary descendant, the African dictatorships – have made the smallest gains while the largest have accrued to the freest countries and markets? Does the Pope’s use of “inequality” refer to earned income? Wealth? These are all monetary measures of material wealth and the context strongly indicates that the Pope is referring to some such denominator of inequality. But he also lectures us sternly to abjure materialism and “the culture of prosperity,” which “deadens us.”

Strictly speaking, we should be striving for human happiness, towards which real income and wealth are only means and for which they are mere proxies, albeit plausible ones. Research shows that the incidence of happiness is nowhere nearly as unequal as that of income or wealth. Shouldn’t the Pope be celebrating this fact? By decrying the maldistribution of the very prosperity he wants us to repudiate, isn’t he vitiating his own case?

But even if we grant the Pope a dispensation from his own religious doctrine and allow him to become a materialist for purposes of this discussion, he can’t very well hold the free-market responsible for inequality if unfree markets produce even more inequality. And that is what records, at least up to the 21st century. Indeed, it was the Industrial Revolution and the growth of commercial society and free markets that created the middle class and made the study of income inequality relevant. Prior to that time, there were only nobility, merchants and the poor.

Incredible as it seems, Pope Francis labors under the misapprehension that famine and starvation result from food wastage by the rich. This flies in the face of centuries of starvation due to natural disaster and cyclical change, succeeded by political famines maneuvered by dictatorial governments superintending unfree markets. It was tremendous improvements in agricultural productivity, effected by technological changes implemented by competition and free markets, that brought us within sight of a starvation-free world.

It was resistance to competition and free markets in Africa, China and India that delayed this milestone. Only in the last twenty years have these barriers begun to crumble. Is the Pope blind to these miraculous improvements? Or does he allow use of the word “miracle” only in a supernatural context? Should he put Catholic Church investigators on the case, he will find the role of the free market much easier to verify than, say, that of Bernadette of Lourdes.

Economists throughout the world are struck dumb by the Pope’s revelation that today, “everything comes under the laws of competition.” Around the world, but most especially in the West and above all in financial markets, government sits tall in the saddle as never before. Government controls interest rates; government runs banks like public utilities; government tries to drive some industries out of business and lavishly subsidizes others. Government seizes control of our health care and arbitrarily makes and changes laws relating thereto. Government monitors our communications on the pretext of protecting us from external threats just as it monitors our personal behavior on the pretext of protecting us from ourselves. Today a Wall Street Journal op-ed laments the “demonization of free markets” that has taken place over the last five years. The author morosely pleads for mercy from the reign of terror unleashed by government on the competitive marketplace.

And Pope Francis declares us in thrall to “ideologies which defend the absolute autonomy of the marketplace?” In what universe does the Pope reside? Even more to the point, where do I go to sign up for the regime the Pope is warning us against?

Does the Pope recall the six million Jews murdered by the German government, elected by a plurality of voters in a democratic election? Is he aware of the dozens of millions murdered in Soviet Russia? The question is not rhetorical; Pope Francis grudgingly admitted in Time that “Communism is wrong” without citing its bloody past or its failure to provide economic freedom. What about the larger human toll taken by Communism in Red China, and the economic reversal behind its recent rise to prominence? All of these governments claimed to be exercising “vigilance for the common good,” just as the Pope prescribes. Indeed, the similarity of their rhetoric to the Pope’s is positively chilling. But the Pope is silent on the relative incentives and historical record of success of government in serving human wants, compared to the free market.

The only form of “corruption” cited by the Pope is tax evasion. But the historic form of abuse for centuries have been high taxes and inflation, which absolute monarchs and absolute democracies alike have used to appropriate the resources of the populace and “keep citizens from enjoying their purchasing power.” Is it perfectly proper for governments to oppress their citizens with taxes and inflation? The Pope regrets the constraints imposed upon “countries” by debt and debt service. But these are created by government spending, not by financial speculation. They are felt by the majority whom the Pope ostensibly cares for so deeply. Is debt only bad because it inconveniences government and not because it has to be repaid by taxpayers? And what about the crony capitalism cited above, which Pope Francis presumably witnessed up close and personal in Argentina? (South America was the birthplace of the practice and the term.) Is it only private citizens who possess the capability for corruption, not government?

The Pope defines the “survival of the fittest” as a condition in which “the powerful feed upon the powerless.” But this can hardly explain the inequality that is the centerpiece of his diatribe against capitalism. If the rich become rich by taking from the poor, eventually the poor run out of money altogether. There is very limited scope for this type of redistribution, but that is all. In our current context, in which a sizable number of fabulously rich coexist with a huge middle class and a relatively well-off class of poor people, the only possible explanation must involve production by the rich. Otherwise, where does the wealth come from? You can only take so much from poor people and keep doing so generation after generation. The volume of wealth created by free societies is produced by a class of tremendously productive rich people who stimulate productivity by middle-class and poor people; that is the only possible way the total volume of wealth can come into being. But this is way over the Pope’s head; he is wallowing in a trough of emotion, untroubled by logic or quantitative considerations.

Pope Francis is similarly silent about the Vatican and the Catholic Church, each of which have a centuries-old history of corruption, depravity and hypocrisy. Popes have enjoyed mistresses, waged war and accumulated vast wealth. The Vatican has tolerated and covered up the practice of pedophilia by its priests. Hypocrisy, La Rochefoucauld reminds us, is vice’s tribute to virtue, so we should not object to Pope Francis’s decorous avoidance of such matters. But the virtue of humility he affects in his daily ministrations would be equally well practiced in his apostolic pronouncements. Today the Church does not meddle in affairs of science by arguing about the age of the Earth, the date of Creation or the Great Flood. It should extend its circumspection to economics, about which Pope Francis clearly knows no more than the least among his flock. In the realm of intellectual inquiry, the Pope should render unto Caesar that which is Caesar’s.

Where is the Pope Coming From?

Pope Francis confidently asserts that the theory of free markets has “never been confirmed by the facts.” As shown above, it is confirmed both empirically and logically by people who spend their lives in that pursuit. It does not require us to hold “naïve trust in those wielding economic power.” Economic power is wielded by consumers, unlike government power which does demand trust and faith on our part but seldom rewards it.

What is Pope Francis thinking about? Even the Pope, who is used to people taking his word on faith, must have had something in mind when making such blanket assertions. In Part Two, the history of opposition to free markets – particularly that relevant to the Catholic Church – will be reviewed and analyzed. It will place the Pope’s statements in a clearer, if no less defensible, light.