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Theological Speculation: How Sinful Can It Be to Feed to Hungry?

John Powers 27 June 2014 No Comment

Pope Francis, in one of his frequent lectures on his perceptions of economics, has taken on a market near and dear to Chicago, and all of Illinois, the Chicago Mercantile Exchange which he condemns in a June 17th address

In this regard, speculation on food prices is a scandal which seriously compromises access to food on the part of the poorest members of our human family.  It is urgent that governments throughout the world commit themselves to developing an international framework capable of promoting a market of high impact investments, and thus to combating an economy which excludes and discards.

I’ve given the Pope the benefit of the doubt on these pronouncements, charitably blaming his economics on his Argentinian experiences, bad translations and nefarious characters in the Curia, all of which may be true, but the consistency of his condemnations are leading me to believe that the Pope is against buying and selling goods for profit. He hasn’t been all that clear on what the alternative is to trading products, currency and services, for other products, currency and services, but he has been clear that trade should meet some standard as benefiting the poor.

Now given that very few people are forced to trade much of anything, it is hard for me to imagine trade doing much of anything but benefiting the people who engage in it (why else would they do it?).  The current demon, though, seems to be the more difficult to explain trade of futures and options, not tangible goods, nor trade which is engaged in by unknowing participants, but “speculation” which the Pope assures is a “scandal”.

 

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I’m not quite sure that it is more or less scandalous to speculate on zinc futures rather than corn and soybeans, but the market is bigger for grains, so there is more activity and employment for food trading, so yes, this is true: people speculate on the price of food.  In fact, just this week I speculated, using one of these scandalous mechanisms (and a broker who is one of the greatest servants to the poor and evangelical mission of the Church that I have ever met, but never mind, he is apparently “increasingly intolerable”) to purchase some Corn Options.  Yes I did it, I purchased a contract allowing me to purchase corn in December of 2014 at a pre-set price.  I did this all without reference to the Curia or any theological reference whatsoever, so I decided to sort out the moral implications of using money in the trade of food.

My givens:

1) Food is not free.  People do not grow it or distribute it for fun.  They do this to make a profit to feed themselves and their families.
2) There is a great value to everyone, rich and poor alike, to have the right products at the right place a the right time.
3) Markets are somewhat complicated in their mechanics,  There is a quite a bit in 1 and 2 that takes a lot of thought and effort.  People tend to make a better effort on 1 and 2 above, if they get paid to do that.

I bought a speculative option, as I think that the price of grain is way too low compared to the poor condition of the corn here in the Midwest. Doing this gives the incentive to move corn from say….Argentina, to the Midwest where it can be used to feed people etc.  Or people may shift from corn starch to, say oat starch, in manufacturing licorice or gravy, as the two are interchangeable based on price.  Or cattle may be fed less corn and more grass, an inconvenience, but a signal from the market that more corn is needed elsewhere.

My purchase may drive up prices, (which would happen anyway just in a more volatile manner)…..or the other thing would happen…we get an imposed non-market alternative by the force of government.  We could have some international commission determining how much grain should be used in licorice production, how much it should cost, and when of if it should be delivered. Taken to extremes, and the Pope is using some extreme language here, we could prohibit people from providing food where it is needed due to the Pope’s proclamations.

I am pretty sure that Pope Francis doesn’t want people to starve to death, but the implications of restraining trade and demanding an “international framework capable of promoting a market of high impact investments” sounds like just the type of program that could bring us to food shortages in some areas, and overabundance in other areas.  Centralized planning of food distribution has been tried over and over again.  It hasn’t worked well.  Perhaps there is a market alternative.

Grain Markets happen because people need an intermediary to determine future pricing of commodities.  They are a signal to producers and distributors for future production and deliveries.  They are also a signal for food manufacturers to adjust recipes and production based on material availability and prices.  The Chicago Grain Markets, under various corporate entities, have been operating pretty efficiently since 1848, to the present.  There must be some reason for this long term success.  Perhaps honest dealing and trading in products that people want to purchase is more useful to society than “impact investing” determined by some governmental body.

I’ll be lining up at confession for my intolerable behavior, in the meantime, I’ll compare my actions to the writings of St. Thomas Aquinas, who had a great understanding of the sophisticated grain trade in 13th century Europe, and concluded it was a moral enterprise.

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John Powers is the President of the Chicago Daily Observer, and a grain farmer in Central Illinois.

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