Friday February 26, 2010

President of the Vatican Bank: Zero Population Growth Responsible for World-wide Recession

By Peter J. Smith

ROME, February 23, 2010 ( – A top Italian economist and current President of the Vatican Bank says the culprit standing at the heart of the worldwide economic recession is not banking practices, but rather the low birth rate that has resulted in zero population growth in Western countries.

“The true cause of the crisis is the decline in the birth rate,” said Ettore Gotti Tedeschi, president of the Vatican bank, Institute for the Works of Religion, on Vatican Television’s “Octava Dies” as reported by Zenit earlier this month.

“With the decline in births, there are fewer young people that productively enter the working world,” Tedeschi explained. At the same time, he said, “there are many more elderly people that leave the system of production and become a cost for the collective,” increasing social welfare costs that a shrinking proportion of taxable young workers will have to sustain.

Tedeschi also explained that young people not forming families “that have a certain number of commitments to children” have adversely impacted the amount of savings necessary for a healthy economy. Instead of putting away money for the future, Tedeschi noted that young people without families have been opting to liquidate their income rather than save it.

“In practice,” the economist contended, “this was the origin of the crisis, which eventually led to the so-called ‘sub-prime’ excesses. The financial instrument of debt leverage, the expansion of credit, was used to compensate the lack of growth in the economy caused by the 0 percent birth rate.”

Fr. Robert Sirico, president of Acton Institute, told that Tedeschi was approaching the global recession with an insight “that comes from a knowledge of how a market functions: the human person is at the base and should be the end of all market activities.”

“The economy is essentially human beings making choices based on their subjective knowledge of their circumstances as to what will benefit themselves and their families,” said Sirico. “And to extent that people are free to produce more than they consume, they enrich themselves, they enrich those with whom they exchange.”

Sirico explained that the Vatican economist’s view opposes that of population control groups, who subscribe to a different vision of economic activity: what he called a Marxist or “redistributivist” paradigm: “If there is a pie and there are more people added to the pie then there is more poverty.”

But the reality, Sirico says is that “the pie is dynamic.”

“Mr. Tedeschi is saying is that: no, the human person is himself creative. Human beings are not mouths that consume, but minds that produce,” he said.

Sirico added that John Paul II hit on this very point in his social encyclical Centesimus Annus, when he wrote that “Man is man’s greatest resource.”

Because human beings are also creative producers, the excess of what they produce becomes the basis for trade in the economy, and the creation of wealth, said Sirico. Contrary to population controllers obsessed with overpopulation, he noted, it is incredibly population dense cities like Tokyo and Hong Kong that are incredibly rich, while sparsely populated areas of the globe such as Angola are comparitively very poor.

Sirico pointed out that 1.2 million unborn babies are killed in the United States alone through abortion – approximately 52 million since 1973.

“That is all those producers and consumers in the market,” he said. “By eliminating younger generations, you are eliminating your future; the superfluous wealth they will produce and all the creativity. Remember that it is creativity that produces wealth.

“So when you eliminate human beings, you eliminate their creativity, you eliminate their discoveries, and you are placing yourself in great jeopardy, because you cannot just stay still. You will go back economically.”

Political leaders unwilling to make hard choices and cut government budgets, Sirico warned, are also likely to “inflate the money supply” to continue operating. The resulting devaluation of money would increasingly impoverish the status of the middle class “and completely decimate the poor.”


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