13th & 14th november 2013
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13th & 14th November 2013. Faith and economy and a perspective on the economic crisis By Johan Graafland Professor in Economics , Business and Ethics Tilburg University. Introduction. Globalization and impotence Complexity Church must speak No concrete policy recommendation - PowerPoint PPT PresentationTRANSCRIPT
13th & 14th November 2013Faith and economy and a perspective on the economic crisis
By Johan GraaflandProfessor in Economics, Business and EthicsTilburg University
IntroductionGlobalization and impotenceComplexityChurch must speak
No concrete policy recommendation But broader analysis in relation to debate on church and society
Contents
Backgrounds of economic crisisAt the micro level
Risky investments by banksIntransparent and complex financial productsInaccurate ratings by rating agenciesIncentives to risk taking by bonus rewarding systems
At the market levelDeregulation inspired by neo-liberal economic thought (Friedman, Hayek)
Philosophical backgroundObjectivism of Ayn Rand
Rational self-interest is the cornerstone of societyAltruism is a vice
Never live for another person and never ask someone to live for youRedistributive policies are unjustAnti Christian philosophyInspired Alan Greenspan
Theological background of Adam SmithNatural theology
Invisible handWell understood self-interestBut embedded in moral framework
Virtues (prudence, justice, benevolence)Smith insufficiently weights potential destructive forces of self interest
Christian valuesCommon good
Financial markets crowd out the social conditions that make people prosper
Bonus culture has diminished motivation to serve the clients
JusticeCosts of risky investments were shifted to society (no reciprocity)
SolidarityParticularly low income groups are hurt
Humility Attitude of admitting errors, openness to criticism and willingness
to change. Then one can learn from crisis Related to simplicity; serves integrity and helps to focus on what is
really of value. In modern economy complex financial products and economic systems have become autonomous and threaten life. Making things simpler gives more control of economic system.
Grace Greed was not only present in financial sector The crisis is not only caused by a lack of individual responsibility,
but also by systemic errors and lack of checks and balances. This indicates collective guilt.
Still, there is also personal responsibility. Experience of God’s love creates room for insight into own failures and motivates to change
Concluding remarkCall for reflection on our own responsibility in our economic choices and in economic institutions.
What is the purpose of banking? What do we aim at? What will make us happy?
Necessary in all our roles Macro: Government and political parties Meso: branch organizations Organizational: corporate governance Individual:
As manager As household (responsible consumption, saving and investment)