Forum Post: The Vatican Response 3

Whereas the crises in the developing countries that risked involving the global monetary and financial system were contained through interventions by the more developed countries, the outbreak of the crisis in 2008 was characterized by a different factor compared with the previous ones, something decisive and explosive. Generated in the context of the United States, it took place in one of the most important zones for the global economy and finances. It directly affected what is still the currency of reference for the great majority of international trade transactions. A liberalist approach, unsympathetic towards public intervention in the markets, chose to allow an important international financial institution to fall into bankruptcy, on the assumption that this would contain the crisis and its effects. Unfortunately, this spawned a widespread lack of confidence and a sudden change in attitudes. Various public interventions of enormous scope (more than 20% of gross national product) were urgently requested in order to stem the negative effects that could have overwhelmed the entire international financial system. The consequences for the real economy, what with grave difficulties in some sectors – first of all, construction – and wide distribution of unfavorable forecasts, have generated a negative trend in production and international trade with very serious repercussions for employment as well as other effects that have probably not yet had their full impact. The costs are extremely onerous for millions in the developed countries, but also and above all for billions in the developing ones. In countries and areas where the most elementary goods like health, food and shelter are still lacking, more than a billion people are forced to survive on an average income of less than a dollar a day. Global economic well-being, traditionally measured by national income and also by levels of capacities, grew during the second half of the twentieth century, to an extent and with a speed never experienced in the history of humankind. But the inequalities within and between various countries have also grown significantly. While some of the more industrialized and developed countries and economic zones – the ones that are most industrialized and developed – have seen their income grow considerably, other countries have in fact been excluded from the overall improvement of the economy and their situation has even worsened. After the Second Vatican Council in his Encyclical Letter Populorum Progressio of 1967, Paul VI already clearly and prophetically denounced the dangers of an economic development conceived in liberalist terms because of its harmful consequences for world equilibrium and peace. The Pontiff asserted that the defense of life and the promotion of people’s cultural and moral development are the essential conditions for the promotion of authentic development. On these grounds, Paul VI said that full and global development is “the new name of peace”. Forty years later, in its annual Report of in 2007, the International Monetary Fund recognized the close connection between an inadequately managed process of globalization on the one hand, and the world’s great inequalities on the other. Today the modern means of communication make these great economic, social and cultural inequalities obvious to everyone, rich and poor alike, giving rise to tensions and to massive migratory movements. Nonetheless, it should be reiterated that the process of globalization with its positive aspects is at the root of the world economy's great development in the twentieth century. It is worth recalling that between 1900 and 2000 the world population increased almost fourfold and the wealth produced worldwide grew much more rapidly, resulting in a significant rise of average per capita income. At the same time, however, the distribution of wealth did not become fairer but in many cases worsened...................... TO SEE COMPLETE DOCUMENT VISIT THE VATICAN WEB PAGE