Keller and Krugman

In “Catholicism, Inc.” Mr. Keller says the church is a troubled business. Maybe it should act like one.  Prof. Krugman, in “Raise That Wage,” says a higher minimum wage is good policy.  Here’s Mr. Keller:

Behold a global business in distress — incoherently managed, resistant to the modernizing forces of the Internet age, tainted by scandal and corruption. It needs to tweak its marketing, straighten out its finances, up its recruiting game and repair its battered brand. Ecce Catholicism Inc.

Yes, the business of the church is saving souls, but it is nevertheless a business: a closely held conglomerate with a work force of more than a million, 1.2 billion more-or-less regular customers, 10 times as many outlets as Starbucks, more real estate than Donald Trump dreams of and lobbying clout to rival that of any secular industry. Now its C.E.O., physically and mentally depleted at age 85, is stepping down, creating an opportunity for a serious relaunch.

Catholicism is mostly a service industry — Canyon Ranch for the spirit, if you will — and its deliverables have stood the test of millenniums: instruction in how to live a good life, sacraments to consecrate major milestones, comfort in times of distress, the cleansing therapy of confession, penance and absolution, a sense of place in the universal order and the promise of a celestial payoff. The fundamental problems are not in the catalog. There is still a robust market for the faith. The problem — evident in the waning confidence of the customers as well as the rising market share of evangelical start-ups and none of the above — is with the management.

As we wait for the ecclesiastical board of directors to fill the Chair of St. Peter, I’ve been asking professional consultants, including some who work with the church, what Catholicism Inc. might learn from the temporal business world. After all, while the church adapts at a glacial pace, it does adapt. The church’s teachings have evolved not just on the liturgy but also on issues as fraught as priestly celibacy, slavery, money-lending, war and peace, wealth and poverty, divorce and the role of women; even that most divisive of issues, abortion, was not always defined as strictly as it is now.

For starters, my experts generally agree, it would help to have a pope with the drive and charisma to reboot the mission, someone with the gift of persuasion, a bit of media savvy and enough years ahead of him to follow through. “I don’t want to make it all about age, but wouldn’t it be nice to have somebody who was closer to 60 than to 80?” said a consultant who has helped reverse the fortunes of a major airline and a global fast-food chain. (Like some of my experts, he preferred to speak on background.) Pope John Paul II became pope at age 58, and before his papacy sank into scandal and Parkinson’s, he was a beloved, globe-trotting dynamo. Benedict XVI was 78 at the start, and he felt a bit like a caretaker.

The first major task facing Benedict’s successor will be to get past the lingering horror story of predatory priests, to restore the trust of the faithful and the respect of the general public. The business world has much to teach about surviving scandal. Michael Useem, director of the Center for Leadership and Change Management at the Wharton School, told me the church might learn from the way Warren Buffett cleaned up Salomon Brothers after a bond-trading scandal and Ed Breen revived Tyco International after its chief executive went to prison for theft. The remedies were bold and effective. First, a purge of those responsible for the abuses and the cover-up. (“Managing out,” as it is called in the corporate vernacular, has been a major weakness in the church, so it was heartening to hear the Vatican spokesman say that Benedict’s retirement could “open the door for a potential wave of resignations.”) Second, unstinting disclosure to investigators, waiving any privileges. Third, appointment of a compliance officer with impeccable credentials, ethical tenacity and conspicuous support at the top. At Tyco, the new leadership went on a high-profile road show of the company’s outposts to drive home the reforms.

“Can you imagine,” Useem said, “if the new pope went on a tour, and at every stop he met with the local clergy and said: ‘It’s a new church. We’ve been at it for a couple thousand years, and at this point we need to uphold the principles we all hold dear, and here are my 10 steps for making that happen.’ ”

Once the new pope has dealt with the legacy of past disgrace, it will be time to look ahead. Ted Stenger, a corporate turnaround expert at the consulting firm AlixPartners and a devoted Catholic, pointed out that most big companies assemble their executives every few years for an intensive strategic review. The last time the church took stock was the Second Vatican Council, half a century ago. “The mission of the church is not going to change,” Stenger said. “But how you set objectives and tactics to deliver on the mission may in fact change.”

One question on the agenda might be, to borrow a Michael Useem analogy, does the Vatican want to be Nokia or Apple? Nokia’s strategy is to sell everyone on the planet a $20 phone. Apple’s is to market a much pricier product to a more elite, high-income market. Does the Catholic Church change its standards to be more inclusive, or does it hold its dogmatic line and appeal to a smaller but loyal base? Or can it strike a balance? Either way, it’s time for a reckoning.

A second big question might be how much latitude to give to the more than 220,000 parishes. McDonald’s has a basic menu that is consistent around the globe, but it gives local franchises license to adapt to local preferences — wine with your Big Mac in France, vegetarian dishes in India. You will find Catholic parishes in cities like New York and San Francisco where gay couples are warmly welcomed, women participate in the liturgy, and the sermons and music are joyously unconventional. You will find others that favor the Latin mass, incense and everything by the book. Rome could encourage the parishes to be laboratories of worship. Useem notes that in business (and in the military, by the way), giving field officers freedom to execute the mission produces creative solutions and “it’s also just a tremendous energizer.”

Another headache the new pope will inherit is recruiting, especially in North America and Europe. In the United States the Catholic work force is shrinking by 50 priests and 175 nuns every month. One parish in five has no pastor. An obvious solution is to ordain women and let priests marry. The monopoly of celibate males, after all, is a long-established custom, but it is not core Catholic doctrine. Then again, if the church decides to be smaller (the Apple model), it won’t need so much ministering.

As you might expect of an institution that measures time in centuries, the church has been slow to join the digital world. Pope Benedict, tweeting as @Pontifex, has 1.5 million followers, which is pretty good, but he has tweeted exactly 35 times — and the messages read like boilerplate composed by a dutiful intern. Bill Derrough, a specialist in corporate restructuring and a fund-raiser for Catholic charities, said that if parishes simply got the names of their members into the computer, they could organize meet-ups, share best practices, spread news. “If the pope wanted to send a message to all parishioners, I don’t know how he’d do it,” Derrough said. Learning from product marketers and political campaigns, “I think you could drive an increase in attendance. I think you could drive an increase in collections.” My wife’s church has hired an online collection service, called ParishPay, to put the Sunday offering on digital autopilot, but most churches still pass a basket.

Finally, and obviously, the church could use some public relations help. Its stock response to criticism from without or dissent from within has been to drop into a defensive crouch, stonewall or go negative. That can come across as bullying and arrogant — in other words, not very Christian. One of the costliest examples of dumb messaging is the tendency of church defenders to treat nuns, and women in general, with condescension. (Did the Vatican really expel an order of nuns from their cloister so the place could be refurbished as a suite for the retiring Benedict? Whose idea was that?)

I realize that many devout Catholics recoil from suggestions of change, especially if the suggestions come from deserters like me. But troubled enterprises often benefit from a little outside counsel. And in the unlikely event that a new pope wants to bring the church closer to the 21st century, he will need all the help he can get. “This is a far tougher turnaround than the ones I have led,” said an executive who has helped save more than one foundering Fortune 500 company. “You might need to tap the guy that turned water into wine!”

Now here’s Prof. Krugman:

President Obama laid out a number of good ideas in his State of the Union address. Unfortunately, almost all of them would require spending money — and given Republican control of the House of Representatives, it’s hard to imagine that happening.

One major proposal, however, wouldn’t involve budget outlays: the president’s call for a rise in the minimum wage from $7.25 an hour to $9, with subsequent increases in line with inflation. The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes.

Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems.

But that’s not what’s on the table. And there are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects.

First of all, the current level of the minimum wage is very low by any reasonable standard. For about four decades, increases in the minimum wage have consistently fallen behind inflation, so that in real terms the minimum wage is substantially lower than it was in the 1960s. Meanwhile, worker productivity has doubled. Isn’t it time for a raise?

Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

What this means, in turn, is that the main effect of a rise in minimum wages is a rise in the incomes of hard-working but low-paid Americans — which is, of course, what we’re trying to accomplish.

Finally, it’s important to understand how the minimum wage interacts with other policies aimed at helping lower-paid workers, in particular the earned-income tax credit, which helps low-income families who help themselves. The tax credit — which has traditionally had bipartisan support, although that may be ending — is also good policy. But it has a well-known defect: Some of its benefits end up flowing not to workers but to employers, in the form of lower wages. And guess what? An increase in the minimum wage helps correct this defect. It turns out that the tax credit and the minimum wage aren’t competing policies, they’re complementary policies that work best in tandem.

So Mr. Obama’s wage proposal is good economics. It’s also good politics: a wage increase is supported by an overwhelming majority of voters, including a strong majority of self-identified Republican women (but not men). Yet G.O.P. leaders in Congress are opposed to any rise. Why? They say that they’re concerned about the people who might lose their jobs, never mind the evidence that this won’t actually happen. But this isn’t credible.

For today’s Republican leaders clearly feel disdain for low-wage workers. Bear in mind that such workers, even if they work full time, by and large don’t pay income taxes (although they pay plenty in payroll and sales taxes), while they may receive benefits like Medicaid and food stamps. And you know what this makes them, in the eyes of the G.O.P.: “takers,” members of the contemptible 47 percent who, as Mitt Romney said to nods of approval, won’t take responsibility for their own lives.

Eric Cantor, the House majority leader, offered a perfect illustration of this disdain last Labor Day: He chose to commemorate a holiday dedicated to workers by sending out a message that said nothing at all about workers, but praised the efforts of business owners instead.

The good news is that not many Americans share that disdain; just about everyone except Republican men believes that the lowest-paid workers deserve a raise. And they’re right. We should raise the minimum wage, now.


One Response to “Keller and Krugman”

  1. Thom Thumb Says:

    (rhetorical alert) Am I too simplistic equating a wage increase mandated by the government to have the same theoretical affect as a tax decrease on the supra-upper class (no cents called them the top 1/10 el porcentaje – when the Gates’ and Buffetts’ are America’s aristocrats). Is not lowering the highest tax rate on ordinary income to pay off the debt of corporations in essence so the government can carry out its larger duties to protect and defend really just an excuse to gerrymander the landscape? What do the Tories call that? Socialized economics?

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