Economist warns Canadian bishops economic crisis will cause further suffering

By Deborah Gyapong

Canadian Catholic News

SAINTE-ADELE, Que. (CCN) — The world is in the midst of the worst economic crisis since the last depression, a Montreal-based economist told Canadian bishops Sept. 25, and “there is no miracle cure.”

Governments do not have much leeway to help those affected, though economies that are more flexible will suffer less, said Pierre Piché, an expert in international investment and adviser to the Power Corporation of Canada.

“There is not much choice,” Piché said to the gathering of more than 90 Canadian bishops. “Either we suffer, or we need to adjust. We’re going to suffer even if we adjust.”

The crisis affects the whole world economy, especially its key engines in North America, Europe and Japan, which have been experiencing malaise since the 1990s. “It goes really bad when you’re on a plane and you have three of the four engines not working,” he said.

He gave a macro view of the problem through key indicators: unemployment that is more and more structural and composed of people who have been looking for work for a longer time than previously or have abandoned looking for work altogether; sluggish rates of growth; and rising government debt.

Piché said fears of inflation have been replaced by fear of deflation where prices go down in a generalized manner. This explains the behaviour of central banks in trying to pump money into the economy.
“Deflation is horrible,” he said. “It’s very serious, because it changes the behaviour of people. When they know prices are going down, they won’t spend. It creates a vicious circle.”

Now there is a cycle where governments and individual households are rejecting a pattern of heavy indebtedness that preceded 2007, he said.
We’re facing what economist John Maynard Keynes called the “paradox of thrift,” he said, noting while it is good and ethically right for households and corporations to be thrifty, however, “if nobody consumes, then nobody sells anything and everyone goes broke.”

Rev. Bill Ryan of the Jesuit Forum for Social Faith and Justice in Toronto offered a theological reflection on the crisis, pointing out Pope Benedict XVI calls for the logic of profit to be replaced by the logic of gift “that is the opposite of putting a price on everything.”

At the basis is the right relationship we must develop between God and human, among humans and with creation, including a preferential option for the poor, Ryan said, stressing the “essential relationship between faith and justice and justice and evangelization.”

“How will we learn to take personal and collective responsibility for the integral human development of all persons,” he said.

“The whole planet is our neighbourhood and in need of evangelization,” he said, noting that the pope’s social justice encyclical Caritas in Veritate also concerned itself with evangelizing and civilizing the global economy.

Faith and justice cannot be separated, nor can evangelization and justice, he stressed.

Ryan call a “new and global humanism” a “sign of the times,” saying the secular world is coming to a “growing consensus we need a new mindset.”

“Our models and tools are proving inadequate; we seem to be walking with no clear purpose,” he said.

Ryan said it is important not always look at big economic structures but at the problems of the small ones. One problem attacking families is the level of family debt which is higher in Canada than elsewhere. “If we don’t have strength at the bottom,” needed values “won’t come into institutions,” he said.

“The family is the first community,” he said. “If we don’t have community there, we’re not going to have it in the world.”