The Moral Paradox of the Global Shadow Financial System
May 21st, 2012
May 21st, 2012
In the past decades, corruption, tax loopholes, and ineffective trading regulations have widened the gap between developed and developing countries, shifting trillions of dollars in assets from the world’s poorest countries to the world’s richest through illicit financial flows. This increased division was the direct result of financial globalization, suggesting a moral paradox: as global societies have become more connected in an economic sense, we have grown farther apart in a certain moral sense.
Perhaps the Church can be effective where mere globalization is not, maintaining a moral influence above that of economic self-interest alone. Indeed, last month, 17 Catholic bishops released a plea to the European Union, asking for important legislation to curtail illicit financial flows to be implemented, including country-by-country reporting and transparency in the extractive industries. The letter states,
“The greed of a few threatens the very survival of the most vulnerable populations. To end this, new rules are urgently needed that ensure that the wealth produced, particularly from the exploitation of natural resources, is not monopolized for the sole benefit of a minority.”
As a student at Georgetown University, I have been influenced by the ideals of a Jesuit education. Namely, Georgetown’s seal in front of flagship Healy Hall bears the motto “Utraque Unum,” or, “both into one,” signifying the Jesuit ability to place education above human contradictions. Like the combination of Jews and Gentiles under the Church, the institution combines science and religion, wealth and poverty, and political beliefs under a call for service to others.
Why, then, has human love not overcome the contradiction between wealthy and poor countries, especially when they have the opportunity to trade fairly, productively, and symbiotically? According to theologian Martin Buber, each individual has two perceptions of the world. The people one encounters exist as either “You” or as “It,” the former having complete equality with his or her observer. However, in a complex, constantly changing world, our relationships with those we impact become abstract, making the “It” view more common. Consequently, most people exist to us only in relativity. We see them in relation to other people but not on a personal level.
Similarly, because they are separated from developing countries by oceans and by GDP, many financial offenders are not actually “greedy” or “immoral” individuals. Instead, they have an innate sense of inequality between themselves and separated people. Therefore, as leaders of the Church release statements supporting financial transparency, perhaps its moral influence can form a bridge in our financially polarized world. An entity that exists among every class of people and every nation clearly has a louder voice than the individuals hiding under non-transparent business practices, particularly when the Church has its own financial affairs to manage morally and, recently, under scrutiny. Of course, preaching to financial criminals will accomplish little, but the Church can influence the opinions of policy-makers and voters through its own advocacy and example.
For instance, even the Vatican is currently combating its own problem with money laundering. In 2010, the Holy See went under investigation when $33 million in Italian funds were frozen, and, though the Vatican recently implemented transparency regulations, leaked letters suggested that illicit dealings had occurred in the past. However, these dealings reflect the vulnerability of any bank, as explained by the British ambassador to the Holy See, Nigel Baker:
“Even the most respectable, well-run bank or financial institution in the world will have some vulnerabilities, there’s no such thing as an invulnerable bank or financial institution, as we’ve had to see recently on Wall Street and elsewhere. I think one of the objectives of the board of IOR is to show that they have modern procedures in place and they are as resistant as any other well run financial institution to being misused. It’s for others to judge whether they have reached that goal or not, but I think it’s very important that they are trying to go down that route.”
According to Baker’s view of inevitability, one must view the Vatican as an example rather than a financial criminal in order for the Vatican’s influence to be realized. Though finger-pointing at the Church is expected after its supposed secret dealings, the Vatican is making an effort to join the European Union’s banking “white-list,” which consists of the countries with the most effective regulations against money laundering. Therefore, the Church’s effort must not be viewed as simply a moral redemption for itself, but also as an example for a worldwide redemption through financial integrity.