I am very much honoured to have been invited to deliver this lecture. Let me start by saying what I will try to deal with.

First, I will talk about the relationship that should exist between the Christian churches and politics.

Then, I hope to show how the insights of Christian Democracy provide answers to the problems people, and economic policymakers, face in these recessionary times.

I believe Christian Democracy is just as relevant today, as it was when Michael Fogarty studied Catholic Social Thinking in the 1930s, when he worked in the Economic and Social Research Institute in Dublin from 1967 to 1973, and later on when he served as Chairman of Oxfordshire County Council

Politics should be open to be influenced by people of faith. Getting involved in politics is one of the best ways to promote Christian values. Opting out of political life, in an effort to recreate a romanticised past, leads nowhere.

Why should politics be influenced by people of faith?

Secularists say that there should be no such influence. They say politics must represent all the people and that, therefore, it should operate in a separate sphere from churches, who should neither influence, nor be influenced by, politics.

I believe this secularist view is naive in its understanding of human nature.

Voters do not divide their minds up into watertight compartments ,marked “religious”, “political,” ”personal,” family” and so forth. What goes on in one part of their mind influences what goes on in the other.

Whatever about religion, secularists will agree that ethical beliefs should influence politics.

But the truth is that it is impossible to separate ethical beliefs from the religious source from which many people’s ethical beliefs spring. Of course, that is not to say that people with no religious belief have no ethical beliefs. Of course they do, often very considered ones. But those who do have religious beliefs draw heavily on those beliefs in formulating their ethics. Furthermore, their religion helps them to hold themselves to account for how they follow them in practice.

Humans are social beings. They do not live atomised lives as solitary individuals. They live and form their ethos in society with other people. Society is made up of multiple overlapping communities of families, of neighbourhoods, of workplaces, of political parties, of nations, of sports clubs, and for many….in the community of a church to which they belong. The overall shared ethos of society or nation is formed, and built up, in all of these communities, interacting with one another.

Indeed society can only function properly if a shared ethos has been formed. Laws are obeyed, not only out of fear of retribution, but just as importantly out of a sense of a shared ethos, an ethos that forms a basis for trust, a shared ethos that alone makes government and governance possible.

His Holiness Pope Benedict summed it all up very well, when he said here in Westminster during his visit

“I would suggest that the world of reason and the world of faith – the world of secular rationality and the world of religious belief – need one another and should not be afraid to enter into a profound and ongoing dialogue, for the good of our civilization.

Religion, in other words, is not a problem for legislators to solve, but a vital contributor to the national conversation”

As long as religious belief exists, and there is every reason to believe it will always exist, the secularist notion that religion and politics should be kept entirely separate is simply unrealistic. It is unrealistic because politics can only work properly if a society has a shared ethos. As long as religious belief exists, it will contribute to the shared ethos of society . Thus it will influence politics. To attempt to organise society as if that was not true, is simply naive.

And naive beliefs, pursued relentlessly as they often are, lead either to tyranny or to the breakdown of the tolerance needed for democracy to function.

Of course, secularism did not appear out of thin air. It was a reaction to an excessive and immoderate dominance of politics by particular religious viewpoints in the past. Secularists should beware of committing the same errors of immoderation, in pursuit of their own cause now.

For example, to seek to use the power of the state to remove every symbol of religious belief from the public space would be just as immoderate as past efforts to use the powers of the state to push one religion on people.

The European Convention on Human Rights, agreed to in 1949, guarantees to every European the right , in its words, to

“manifest his religion, with others in public or private , in teaching, practice , worship and observance”.

The Convention extends its protection to all religions and not just to Christianity.

In that context, it appears to me that the Swiss vote to ban minarets on mosques in Switzerland is a denial of the right to “manifest” religious belief “in public” as guaranteed by the Convention.

In the same vein, Christians should not confuse Christianity with some form of Euro centric cultural nationalism. Christ came on earth to save all mankind, not just people who can prove European ancestry.

One of the major challenges we have to work on today, as Christian Democrats, is the relationship in mixed societies between Christianity and Islam. As Archbishop Rowan Williams said recently, in a speech on Christian/Muslim relations

” both our faiths are missionary faiths…precisely because we have that in common, it is not easy to find a space we can inhabit together”.

Yet, as he also pointed out, we share a passion for universal truth and that helps us to recognise in one another the same fundamental seriousness about the things that are really important.

I believe that Christian Democracy, which is founded, not on individualism, but on respect for the fundamental value of each person, is well placed to help society to respect the fundamental value of each Muslim person in every respect, including in his or her religious beliefs.

And I would also argue that Christian Churches, precisely because they are religious institutions, are better placed to reach out to believing Muslims in a respectful way, through common activities at local level. Christian Democrat inspired political parties should also be open to membership by non Christians who accept the social principles which we seek to put into action in politics.

You cannot separate the religion practised by a significant body of its members or citizens from politics. But there are clear distinctions of function to be respected. Working out these boundaries will be an ongoing task, and they will shift from time to time. That is not a threat to anyone. In the past, in my country, the church took in roles that the state was unable to take on. Some of these roles can now more easily performed by the state, with its increased resources and the reduced fulltime manpower available to the churches.

There are, of course, areas the state should not enter, just as there are areas that the church should leave to secular authorities.

Having, I hope, made the case that Christian believers have a right to bring their religious insights to bear on political questions, I would now like to say how these insights can help find answers to some of the political questions of our day.

Coming as I do from Ireland, I am sure you will understand if I start with economic problems of the Western World, economic problems that have been brought to the surface by the financial crisis, but which existed already anyway.

The credit boom in some western countries since 2000, that was fuelled by Chinese , Japanese and German savings, was an anaesthetic that prevented the symptoms of underlying problems from emerging.

In that sense, we would have been better off if the crisis had occurred sooner, because we would then have been forced to deal with the underlying problems sooner……and less painfully.

The underlying problems are

the ageing of our societies,

the way our education systems fail some of our children,

the unsustainability of western patterns of energy and food consumption,

the distorted allocation of resources in capital markets,

and our inadequate means of supervising flows of capital across borders.

The fact that people are living longer has meant that the pension systems of most western countries are unviable. People are now retired for too long a period to be supported by the contributions they made in taxation or to pension schemes during their working lives. This was made worse by mistaken “early retirement “schemes introduced to create jobs for younger people, or solve short term public finance difficulties.

The emphasis that Christians place on the family will become more important as the welfare state, to which many family responsibilities were transferred in the past sixty years, becomes financially less capable of bearing them.

The ageing of societies has also contributed, along with law cases and incentives to over use of drugs and tests, to an explosion in health costs. The United States is the worst case here but other countries are heading in the same direction.

These problems were known during the credit boom, but little was done about them because money was artificially plentiful. Anyone who proposed unpopular changes would have been accused of being a heartless book keeper.

Education systems have also been failing to respond to challenges. A significant proportion of young people continue to drop out of school with few or no qualifications .The only jobs some of them are qualified to do can be done more cheaply in Vietnam or China.

The educational system has been designed for those with academic aptitudes, but not to nurture other forms of intelligence. This is a failure of imagination and intellect by educationalists, rather than just a failure to provide money.

An education system which caters well for those who can compete academically, but has no relevant answers for those whose talents lie in other directions, is not living up the Christian Democrat motto that “every person counts”.

Young unqualified males are particularly vulnerable. 75% of the recently unemployed in the US are male. Young females may find jobs locally in the service sector, but the jobs that unskilled males used to do, either migrated to the Far East, or were in volatile sectors like construction.

Income inequality has risen, especially in English speaking countries. Globalisation gave great rewards to those who had the skill to position themselves at the various busy cross roads of the information society, like in finance, entertainment, law, or professional sport, where they could either levy what economists call an “economic rent” (ie. an artificial scarcity premium) on the rest of society, or could hold their employer to ransom by threatening to move to another firm, or to another jurisdiction with a lower tax rate.

But Globalisation left other people behind. It brought lower prices and consumer choice, but the benefits were not always distributed fairly. Fairness can be a nebulous concept. It can also be a cover for self serving arguments.

As I see it, fairness is not a matter of looking for equalization of incomes. It is a matter looking for proportionate returns to the effort people put in, to the risks they have taken, to talent they have,and to the social contribution they are making. This is all a matter of judgement based on values.

Fairness cannot be achieved by a state imposed incomes policy, as was attempted in Britain and many other countries in the 1970s. But it can be brought about if long term values get a better hearing in the board rooms of companies, and by the enforcement of competition policies that make it harder to charge “economic rent”.

Economic activity is a means to an end. The end we seek is a society at ease with itself because every member of society feels that his or her contribution is respected.

The financial crisis has also laid bare the fundamental unsustainability of our patterns of energy and food consumption in the western world.

There is not enough oil, nor enough fertile land, nor enough unpolluted atmosphere, in the world to cater for a situation in which Indians, Chinese and Brazilians would consume oil, coal, and livestock products at the rate we do in Europe and America. It takes far more acres to produce protein and calories off the back of an animal, than straight from the ground.

The legacy of colonial intervention in China and India held those countries back for two centuries. Western patterns of consumption of food and energy only became possible because there was less competition for these resources from those countries and because we controlled the rules of the economic game. That era is now over.

The growing middle classes in emerging economies will look for the same energy usage, and meat and dairy intensive diets, that we take for granted. Energy and food prices will inevitably rise because of that. On present trends, China’s oil imports will double in the next twenty years.

The capital markets have not covered themselves in glory in recent years either. Thanks to financial innovations, shares in companies could be bought and sold with much greater frequency than ever before. Hostile takeovers became easier to mount. This meant that companies were judged, and executives rewarded, on the basis of short term movements of share prices.

This had its most devastating effect in banking, where credit broke down completely in 2008

And what is credit after all?

Credit is trust. That is what the word means.

As the Pope puts it in the Encyclical, Caritas in Veritate, prepared before the financial crisis had fully unfolded

“Without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function. And today it is this trust that has ceased to exist, and the loss of trust is a great loss”

This is a very important insight. All markets depend on trust. Without trust, we would find ourselves spending so much on lawyers to check one another out, that trading with one another would become incredibly expensive.

But where does trust come from?

It comes from a shared ethos or belief system.

And where, for many people, does their ethos come from? To a significant degree, it comes from their religious beliefs.

A number of economists are coming around to the view expressed by the Pope. They see that Regulations cannot alone create the degree of trust and confidence necessary for markets to function properly. There has to be trust too. Markets need ethics, and, for many, ethics derive from religious belief.

Ask business people about doing business in China today and they will tell you about great opportunities there, but that these are reduced by forms of lack of trust, like corruption and intellectual property theft. This underlines what the Pope says about solidarity and trust being necessary to the proper functioning of markets. Even in the narrowest “economistic” meaning, his words make sense. They illustrate, in a very real and modern way, what a shared religious heritage, and its consequential shared ethos, can contribute to our economic success or failure.

In 2008 we had to save the banking system. Over the last four centuries banking allowed us to use our resources in ways that would have been impossible without it. But, in the medium term, we also need to decide the proper role, function, and scale of banking in our society.

We need a banking policy, not just a bank rescue policy. Banks that are “too big to be allowed to fail” or “too interconnected to be allowed to fail” must never again drag taxpayers unwittingly into underwriting huge private risks.

The short-termism that brought banking down infected other businesses too. Productivity gains were preferred to innovations. The human capital of a company was valued less than it should be.

We are only beginning to consider how to change this.

One suggestion is to enhance the voting rights of shareholders who hold their shares in a company for a longer period.

The freeing up of global capital markets has outdistanced the supervisory capacity, and even the understanding, of national financial regulators.

This allowed the build up of unhealthy imbalances in the world. Half of the debt of the United States is now held by foreigners, particularly the Chinese central bank. The Chinese have bought these dollar denominated assets in order to keep the value of their own currency artificially low. Meanwhile the US is printing more dollars through Quantitative Easing. The net effect of these political decisions may be that both the Chinese and American currencies are artificially devalued against other currencies like the euro or sterling.
This would introduce more uncertainty and tension into a world that is already uncertain and tense. It is reminiscent of the behaviour of nations during the 1930s.

Politically created problems need political solutions. The venue in which these political solutions should be found is the G20. But the G20 has not yet fully found its feet, and is governed by a rotating Presidency, something the EU has found to be unsatisfactory.

In fact, if free movement of capital across borders is to be allowed to continue, the world probably needs to institute what the EU itself is trying to grope its way towards in the euro area, namely a system of cross border economic governance that highlights imbalances and distortions long before they become bubbles about to burst.

Fines and penalties may not be necessary. So long as information is shared and published in a timely way, intelligently guided markets should discipline delinquent behaviour. The job of supervisors and rating agencies is to ensure that the information is obtained and published in good time and is interpreted intelligently and courageously. That did not happen in recent times, and rating agencies were entangled in unethical conflicts of interest which compromised their truth telling role. The IMF should be given the full range of supervisory functions over all its members, including the United States and China.

Markets need rules, and the rules must be enforced. The market is a social and legislative construct. If the absence of rules, and untrammelled freedom, was the best way to a good market economy, Somalia would be the richest country in the world!

But even if we do all these things right, as I have said earlier, I believe we are entering a period when material conditions for Western countries will not be as good as they were until recently.

Our share of the world’s wealth will be less.

Our ability to control the rules of the game will be less too. We will no longer be able to keep tariffs high for things like textiles and cotton to protect our own producers, while insisting that tariffs are low for what we want to export.

We will also have pensions to pay and debts to repay, and a diminishing workforce to earn the surplus needed to do so.

Compared to our grandparents, we will remain very wealthy, but compared to people in other parts of the world, we will be comparatively less well off than we are today.

I believe that religious belief will help us to put these superficially uncomfortable changes into proper proportion. It will help us realise that material progress is not, and never was, the elixir of happiness.

A survey a few years ago, found that the Japanese were ten times better off financially than the Poles, but no happier.

The Poles were happier than the Hungarians, despite similar levels of wealth.
The United States today is much richer than it was in 1960, but the divorce rate has doubled, the prison population has increased fivefold, and clinical depression has tripled. People are richer, but no happier than they were in 1960.

This is not to say that material wealth does not bring happiness to nations. Up to a certain average per capita wealth, it does. But above that level, and we here are far above it, it seems to make little difference, on average.

Beyond a certain point, all more wealth does is give us is more choice, and more choice on top of more choice. 27 choices of printer for our computer, 500 choices of television channel, endless choices of foods flown from the far side of the globe, holidays destinations in countries we had never heard of ten years ago. Is that a recipe for happiness?

In fact, it seems it sometimes even makes us less happy. Choice adds to anxiety. It absorbs time, time we might use better otherwise. We are never fully satisfied by it. How many really happy faces do you see in a busy shopping centre?

Unfortunately, studies suggest that what makes people relatively happier is not so much being better off as such, as being relatively better off than whoever it is they normally compare themselves with, their brother in law, their work colleague or whoever. And conversely what makes them unhappy, is falling behind those people.

What people really want and need is a sense of control of their own lives, and a sense of belonging.

Sometimes, accepting that we have enough, is a key to a good life. That may not please the economists who are constantly looking around for “consumer confidence”, a barren and soulless concept, if ever there was one!

So, in the end, the problem is one of values.

The values we need to survive the recession are ones that bring us out of ourselves, that help us to transcend our own problems, by interesting ourselves in other people, and by giving service to something greater than ourselves.

It is noteworthy how the recession is altering people’s values already. The chief executive of the Society of St Vincent de Paul in Ireland told me this week that his organisation have been able to set up more new conferences(branches), with new volunteers, in the past two years than it had been able to do in the previous twenty years.

As Pope Benedict put it when he spoke in Prague last year

“human aspirations soar beyond the self, beyond what any political or economic authority can provide, towards a radiant hope that has its origin beyond ourselves yet is encountered within, as truth and beauty and goodness.“

Note for editors; The Fogarty lecture is sponsored by the Centre for Christian Democracy, which is affiliated to the European Peoples Party. John Bruton was a vice President of the European People Party from 1992 to 2005.
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