Religion Meets Economics

A friend recently darkly hinted that the Church has the ability (and desire!) to silence people on Facebook. I pointed out that that whole albino monk assassin stuff is *fiction*.  Not sure I had any effect.

Similarly, all kinds of crazy stuff gets written on church finances that, typically, studiously avoid any perspective or economic reality check.  Let’s run through a few examples:

– The Vatican is rich, rich, rich! Untold billions!

Turns out the Vatican has an operating budget of around 300 million dollars, and an endowment of about $1B. While not chump change by any means, this is in the range of a middling American college or hospital. Harvard has an operating budget of $3.7B and an endowment of $30B.  (And here’s a link to – Gulp! – the National Catholic Reporter. At least, we can safely say the source isn’t *too* pro-Vatican…)

– But what about all that artwork?

Right. Imagine the outrage of the Italian people and government – masterpieces that are a sources of pride and devotion and billions of tourist dollars are now in some rich dude’s living room in LA? Non capisco! I’ve heard that the Vatican is legally the custodian, not the owner, of its art, and that the Italian government has laws against anybody selling Italian masterpieces. which all makes perfect sense upon a moment’s reflection.

But even if the Vatican were to ignore the law, here’s a question: How big is the market for art? In other words, how much money is out there in the world to be spent on art? About $60B. Assume two things that are unlikely to be true, but paint the most optimistic picture of the value of the Vatican’s art collection: that 100% of the available money would be spent on Vatican art if it were available; and that maybe another $60B might come out of the woodwork if Michelangelos and Rafaels hit the market.  So, wildly optimistically  there’s $120B per year that might be spent on Vatican artwork, that could theoretically then get spent on the poor.

But what really happens when the Pieta hits the auction block? It’s priceless, but if this is worth $120M, then I’d say a billion for the Pieta is a bargain. Let’s try to understand the buyers:

– it is very unlikely more than a tiny handful of buyers, either private or institutional, has a billion dollars to drop on a single artwork;

– while there are some buyers who would be eager to drop a $1B  because their egos would be fed by having the Pieta in their living room, others are going to wonder: if a whole bunch of Vatican art hits the market, what’s that going to do to the value of my other stuff? Note that this isn’t an artistic judgement, but an economic one: if you can buy a first-rate Bernini at price X, what does that do to the value of my Rodin? I’m guessing that any auction featuring Vatican masterpieces would have very few bidders and leave most of the art market very unhappy;

– Once buyers become convinced that yet *another* timeless masterpiece is being sold, excitement – and prices – start to drop even more.

So, the reality is that the Vatican could sell maybe a few billion (and probably much less) in art per year for possibly a few years before the market gets saturated and prices fall. Similar arguments can be made over lesser works – there’s no way the Vatican could sell many of its lesser works without overwhelming or suppressing the market.

Same goes for real estate. Besides, what are you going to do, open a Walmart off the Piazza St. Peter?

But what about all the other real estate? All those Catholic parishes, schools, hospitals, retreat centers, bishop’s houses, monasteries  convents and so on? The church, in all its decentralized members, does sell and buy property all the time. But there’s something like 1.3 billion Catholics *using* this property – isn’t arguing that the property be sold pretty much arguing that the church should be disbanded? At least, let’s be honest about what we’re suggesting, and recognize with that same honesty that the church can hardly be blamed for choosing not to dissolve itself.

Also, recognize that those buildings and land are usually both the collection and distribution points for the charity that the Church does supply (more than any other organization in the world) to the poor and needy.

Are there things that could be sold? Is there money that could be better spent? Of course. But now we’re in the realm of good management and prudential judgement. No one would ever dispute the suggestion that better management and judgement is needed in Church affairs – as it is needed everywhere in human affairs.

Albino ninja assassin monks and a wacky conspiracy theory are not required to explain the Church’s behavior here.

Author: Joseph Moore

Enough with the smarty-pants Dante quote. Just some opinionated blogger dude.

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