Subsidiarity

Catholic social teaching has much to say about economics and this article from First Things, with a focus on subsidiarity, is excellent.

An excerpt.

“Attempting to differentiate among the categories of culpability for the crisis is more than an amusing parlor game, for this crisis is the result of a complex convergence of behaviors that we are only beginning to appreciate. Understanding the different types of behavior that got us to this point is crucial to crafting an intelligent plan for digging us out of this hole and preventing us from falling back into it in the future. Can appropriate limits to greed be legislated without compromising the vitality of our markets? Are some outright caps on how much money lenders should make appropriate, in the form of usury laws or compensation restrictions? With respect to fraudulent activity, where is the line between aggressive selling and outright lying?

“A significant consideration in assessing possible responses to these questions should be the application of subsidiarity. Subsidiarity is a fundamental tenet of the Catholic Church’s social doctrine. As Pius XI wrote in Quadragesimo Anno:

“’Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do.’”

“The Compendium of the Social Doctrine of the Church cautions that it “is impossible to promote the dignity of the person without showing concern for the family, groups, associations, local territorial realities.”

“Subsidiarity plays itself out in our response to the banking crisis in a very significant question: Should the federal government be the sole arbiter and enforcer of consumer credit law, or should some power be retained by state governments? The battle over the expanding federal preemption of state consumer credit laws has been raging in banking circles and federal courts for years. It is currently before the Supreme Court yet again, in the case of Cuomo v. Clearing House, L.L.C. It is also one of the points of contention among the members of the Congressional Oversight Panel on Regulatory Reform that prompted two of its five members to withhold their support from the Panel’s January 2009 Special Report on Regulatory Reform.

“The basic question is whether a state has the authority to regulate the terms under which national banks can lend money to consumers within that state. Over the past few decades nationally-chartered banks have come to be insulated from the reach of virtually all state consumer credit laws. Aggressive interpretations of federal banking laws by the Comptroller of the Currency, uniformly ratified by the Supreme Court, give national banks the power to export the regulatory regime of the state in which they are headquartered to borrowers in other states. Lenders who want to offer credit to consumers across the county on uniform (and essentially unregulated) terms charter national banks in states with no regulation of credit; they export this lack of regulation to all of their borrowers across the nation.”