Let's Imitate the Pope

In his new encyclical, the Pope's embrace of both the poor and efforts to reverse climate change will alienate some of his faithful, but it's sensible and exemplary. This Pope's central concern is the poor. He has taken aim in the past at the excesses of capitalism, and he's done it again with his linkage of climate change and poverty. To put it harshly, they are both byproducts of the free world's exploitation of the planet--and not only that, the poor may be among the hardest hit by the weather extremes of climate change. And the people who will bear the brunt of the problem are the world's poor, who will not have the means to protect themselves--move to safety and higher ground, find or pay for fresh water or food, avoid the killing heat, starve for lack of crops and on and on.

The Pope doesn't hate capitalism. He simply wants to give it a conscience. At the core, what the Pope Francis did was to define the problem. It's basically incontrovertible. Those who deny it are either ignorant or have a conflicting self-interest in denying it. Second, while there are other causes, for climate change, man's contribution is also undeniable. And we can do something now to ameliorate, if not prevent, a catastrophe.

On the economic equality side, the problem is somewhat similar. The causes for inequality are many: technology and globalization conspire to eliminate jobs completely or to transfer jobs from the higher-paying countries to those offering cheaper labor. This is unintentionally destructive to the economies of the developed world. In all fairness, this same transfer of jobs, as a result of capitalism is, at the same time, enabling much of the developing world to advance into a better quality of life. Climate change, on the other hand, as a consequence of the industrial development, has its worst impact on that same undeveloped world. And those two impacts go on unabated -- and likely will intensify in their destructive impact. But business, in this case, cannot deny its culpability, its role in contributing not only to income inequality, in the developed world, but the devastating consequences of being poor.

For the past four decades, business has been paying employees (other than CEOs and top management) less and less relative to what top management, shareholders, hedge fund managers and the like have gained. In fact, since mid 1970s, wages for employees have basically flat-lined. The "haves," on the other hand, have never had it so well. The bad years hardly affect them: 2008 was a mere speed bump for the richest percentiles, as the stock market continues its charge upward.

The response to this crisis is similar to what you see with climate change. The "deniers" in business claim the only problem is that the poor lack accountability and personal responsibility. They make bad choices. In other words, it's their fault they're poor. To shrug off responsibility for lack of economic opportunity is to close our eyes to the contributing role of business in helping create economic imbalances that are insurmountable for the unemployed and under-employed. Too many business leaders also claim that the only role of business, their so-called fiduciary responsibility, is to shareholders. From this perspective, shareholders deserve and have the right to maximize their short-term profit. Which in fact is total nonsense. Shareholders have no more rights than employees or the corporation itself (who are the other major corporate stakeholders) to share fairly in a corporation's productivity and innovative outcomes.

The myth of shareholder primacy was created by a misleading economic paradigm embraced by many in the financial community who benefit mightily from this entitled, and, in the end, self-destructive imperative. And just like climate change, current practices are unsustainable and can lead to potentially catastrophic consequences -- greater poverty, social unrest, economic collapse, or even revolution.

Unlike Pope Francis, business does not have a single leader who has a bully pulpit to rally his believers. But business does have its "princes" -- its leaders who have nearly as high a profile right here in America, where it counts the most. It is their job, their responsibility, to grab the megaphones, speak out and offer potential solutions.

Pope Francis is doing his job when it comes to those who haven't been invited to the party, who are largely forgotten by those gaining the most from what's actually working well in our society. Political leaders so far talk, debate and do nothing. They're paralyzed. Dare we hope that business leaders will reach for the megaphones and begin to speak the truth about the economic imbalances that Pope Frances recognizes as just as threatening as climate change? And maybe they'll even offer some constructive solutions.

Peter Georgescu is the author of The Constant Choice. He can be found at Good Reads.