The pastoral letter on economic justice released in draft form last weekend by the U.S. Roman Catholic bishops makes several recommendations for aiding the poor that have been tried and abandoned as unworkable or too costly even by many liberal economists and politicians.
While sharing the bishops' goal of improving life for the poor, these economists and politicians have come to a different sense of what can be achieved given the nature of American social and economic institutions and behavior.
Thus, the bishops, to take the most obvious recent example, go much further toward the liberal end of the policy spectrum than did Democratic presidential nominee Walter F. Mondale.
One of the bishops' major goals, lowering the unemployment rate to 3 or 4 percent, is by law an official government objective. But virtually no economist, liberal or conservative, thinks the rate could be driven that low now without driving up the inflation rate, and no administration in more than a decade has recommended doing so.
A second goal of the bishops is to reduce the unequal distributions of income and wealth in this country. They would liberalize welfare and eliminate taxes for the poor while increasing the progressivity of the tax system generally.
In contrast, current tax proposals even from some liberals emphasize lower rates rather than progressivity because of a perceived economic need to increase saving and investment in future growth. In addition, rather than increasing welfare benefits and cutting red tape for applicants, action has been taken by President Reagan, Congress and many state governments to reduce the real value of benefits and make the programs more restrictive -- points the pastoral letter notes.
Another goal set forth in the letter is to increase help to developing nations through direct financial aid and private investment and through open access to U.S. markets. However, the bishops noted the unpopularity of foreign aid, saying, "Its supporters seem paralyzed intellectually and politically."
All but ignoring the virtual consensus in the economics profession that an unemployment rate of 3 to 4 percent would spur inflation, the bishops call such a low unemployment rate "a reasonable definition of full employment in the United States today." The draft of their letter does note that economists say inflation would accelerate if unemployment fell below about 6 percent. But the bishops reject this sort of thinking as "dangerous," saying that many factors influencing inflation "are at least in part under human control."
The bishops also indicate that the possible inflationary effect should be considered only in choosing among job-generating programs, "not as a reason for simply opposing them."
However, the notion of full employment originally was based on a concept of high utilization of all of the economy's resources, capital as well as labor, in a relatively non-inflationary manner. The 4 percent estimate of the unemployment rate at full employment arose because that was the rate associated with a period of high use of available resources during 1954.
Since then, a variety of changes in the economy and the nature of the U.S. labor force have caused an increase in the levels of unemployment and demand that likely would be associated with a constant inflation rate.
Economists, in fact, have never been able to identify or measure any major detrimental impact on economic activity from inflation rates no higher than the United States has experienced. But they also know that high inflation rates increase uncertainty and anxiety, and government historically has responded to such anxiety with restrictive policies designed to increase unemployment and cut inflation.
The bishops also declared support for government creation of jobs for the "structurally unemployed," through public service employment or public subsidies for jobs in the private sector. In addition, they favor added funding for and redesign of job-training programs as a means of reducing joblessness and increasing pay for the poor who already have jobs.
Both approaches have been tried extensively during the past two decades with minimal results in reducing the number people classed as structurally unemployed -- those who want jobs but do not have marketable skills.
During the Carter administration, a large program of direct public service employment eventually was discredited by perceptions of abuse and failure. It was later eliminated by Congress at Reagan's behest.
Another area in which the bishops' recommendations run counter to recent action is in their call for raising wages and/or government benefits so that all persons working full-time and their families could stay out of poverty.
The value of the income of those earning the minimum wage has been falling because the minimum wage has not kept pace with inflation in recent years. Many economists contend minimum-wage requirements are a mixed blessing at best since they reduce employment opportunities for low-skilled individuals.
At the same time, most economists, liberal and conservative, have taken the same position as the bishops in denouncing trade restrictions as a method of protecting U.S. companies and jobs from foreign competition.
"More open trade relationships with the developing countries will surely require domestic adjustments in the United States; we need to examine carefully, therefore, the extent to which the success in the U.S. market of certain imports derives from exploitative labor conditions in the exporting country," the bishops' letter says. "But a society and an economy like ours can beter handle trade dislocations than can poverty-ridden developing countries."