It would be an understatement to say that people across the world from all backgrounds and political persuasions are nervous about what artificial intelligence (AI) might mean for the future. The extent to which AI is on people’s minds can be gauged by the immense interest shown by believers and non-believers alike in a document published in May this year by the leader of the world’s most ancient institution. 

　　Pope Leo XIV’s first encyclical, Magnifica Humanitas (MH), seeks to inject wisdom into a discussion often dominated by two extremes. The first is a wild-eyed techno-utopianism that would drag us into what the Cambridge literary critic F. R. Leavis called a “technologico-Benthamite civilization.” The second is a techno-catastrophism inclined to see every technological development as an existential threat to humanity.

　　In many ways, MH is an impressive document. Pope Leo’s framing of AI through the lens of two biblical images—the construction of the Tower of Babel and the hubristic mentality underlying it, versus the rebuilding of the walls of Jerusalem by people who are humble and aware of their limitations—is extremely powerful. Likewise, MH’s discussion of what it means to be human effectively underscores the ineradicable differences between humans and the things that we create.

　　Others have written at length about these and other important contributions of MH to the ongoing debates about AI. There is, however, one matter that has been passed over too lightly. This concerns MH’s commentary on economic questions. Certainly, these topics are treated in MH in a far more balanced manner than in Pope Francis’s Laudato Si’. Nonetheless, there are significant deficiencies in this area that weaken the document’s persuasiveness. One such limitation concerns some factual claims made in the encyclical.

　　Factual Flaws

　　Catholic Social Teaching (CST) has long been preoccupied by “economic inequality,” responding to the obvious reality that some people possess more wealth—sometimes vastly more wealth—than others. In several places, MH presents this fact as something to be concerned about (MH 155, 161,164, 240).

　　Yet wealth inequalities are not unjust in themselves. For instance, some people are wealthier than others because they worked harder than others or chose to take risks that others declined to take. Such people are surely in an entirely different category than, for instance, the individual whose wealth proceeds from being the president of a country that he has systematically looted.

　　Then there are important features about the nature of wealth in modern economies that MH does not recognize. For instance, very little of the wealth possessed by the “billionaires and trillionaires” regularly denounced by politicians of all stripes is actually consumed by such people. A great deal of this wealth takes the form of stock. That means it is not easily turned into liquid cash. It also reflects the market value of companies in which many immensely wealthy—and countless numbers of far less wealthy people—have invested, or, in the case of someone like Elon Musk, played an indispensable role in creating and then scaling. Many of these companies are also able to provide employment and, therefore, work and income for millions of people, precisely because they possess so much wealth. Small and medium-sized businesses cannot perform this function on anything like the same scale.

　　CST rarely gives proper attention to these types of facts, and MH is typical in this regard. It further muddles matters by misreading the state of play regarding economic inequality in the world today.

　　The encyclical states, for instance, “While the world’s wealth has grown in absolute terms, it is increasingly concentrated in fewer hands, widening inequalities both within and between countries” (MH 161). In fact, there is extensive evidence that global inequality has decreased over the past quarter century. A 2026 Brookings Institution analysis, for example, of economic inequality points out that:

　　the main trend is a sharp decline in global inequality in the twenty-first century. This is particularly clear for inequality of consumption—a preferred measure—as consumption can be observed more reliably than income in low-income economies. … In 2000, the average consumption of the top 10% of the world population was around 40 times that of the bottom 50%. Twenty years later, in 2020, this ratio had fallen to roughly 20 times, and it declined further to 18 times in 2025.

　　The report goes on to observe that the pace of economic change in China, India, South-East Asia, and Eastern Europe has translated into “almost half the world [benefiting] from rapid economic growth and [living] in countries where living standards are converging with those in the United States and other advanced economies.”

　　To be sure, the Brookings analysis stresses that the trajectory of economic inequality inside many countries presents a more mixed picture. In some countries, it has increased. In other nations, it has fallen. But the overall picture clearly contradicts MH’s characterization of economic inequality in today’s world.

　　Holy Strawmen

　　Magnifica Humanitas sows further confusion via several of its observations about the place of the market economy in the past half-century of economic history.

　　“More than ever,” MH states, “it is no longer possible to rely solely on the ‘invisible hand’ of the market” (MH 163). In another place, the encyclical contends that “an almost blind faith was placed in the ability of the markets to generate prosperity, democracy and stability” (MH 201) after Communism’s collapse.

　　A serious look at recent history soon indicates that these arguments are strawmen. Undoubtedly, major efforts were made to liberalize economies between 1980 and 2008. But today’s critics tend to exaggerate the scale and depth of that liberalization, often dramatically. Neither Ronald Reagan nor Margaret Thatcher did much, for example, to tame the welfare state, let alone reduce public expenditure as a percentage of GDP.

　　Yes, there was widespread recognition in the 1990s—including on much of the political left—that socialism and other forms of collectivism were no longer serious options. But skepticism and wariness about socialism, as well as the desire to promote greater economic liberty, are not the same thing as believing that the spread of free markets will usher in nirvana.

　　Every account of the economic liberalization programs of the 1980s and 1990s that I have read emphasizes that few liberalizers were market-utopians. For the most part, they were political realists who made plenty of compromises along the way. On an international level, discussions about greater trade liberalization at organizations like the World Trade Organization were marked by contentious debates about the pace and scope of lowering trade barriers, as well as the implications of allowing China to enter the WTO.

　　The State on the March

　　Putting those pieces together, one sees a very different picture of the history of economic liberalization after 1990. But the shortcomings of MH’s economic observations become even more concerning in light of a very significant omission. That would be its silence on one of the twenty-first century’s most important economic developments: the steady surge of governments back into the world’s economies since 2008.

　　Consider, for example, the United States, whose economy invariably looms large in many Western Europeans’ consciousness as the epitome of “savage capitalism.” Between 1970 and 2025, the number of restrictions in the US Code of Federal Regulations grew from 441,276 to 1,367,625. That is not a trend characteristic of a laissez-faire economy.

　　The harms of state interference in the economy are well-documented in the economics and political science literature.

　　There has also been a noticeable uptick in direct state intervention in the US economy since 2016. For example, the Federal government under the Trump I, Biden, and Trump II administrations has pursued protectionist policies that, by definition, try to steer the economy in particular directions. The same policies have increased prices for businesses, but also for consumers, and the costs are borne disproportionately by poorer Americans. Intervention into particular economic sectors via industrial policy (the very purpose of which is to try and produce economic outcomes different from what the market might have otherwise delivered) was used extensively during the Biden administration. These policies have been continued under Trump II and even expanded in the form of the Federal government taking stakes in specific businesses.

　　Putting concrete numbers on all this—not to mention the entitlement programs that constitute the bulk of federal spending, as well as the costs associated with the ongoing growth of federal, state, and local government regulation—is a perilous exercise. But in 2025, the ratio of government expenditure to GDP in the United States was just under 38 percent of total GDP. That is not a small number. It also represents a 4.9 percent increase since 2001. It goes without saying that the same ratio is considerably higher in the European Union, where state expenditures have risen dramatically in recent years. As for China, it too has experienced a significant reassertion of direct state control (including in AI development) over the world’s second-largest economy since 2012.

　　Taken together, these facts illustrate that Adam Smith’s invisible hand is being increasingly restricted throughout the world by the state’s very visible and increasingly blunt hand. This is the economic story of our time to which MH’s drafters were apparently oblivious.

　　Faith in the State

　　There is a broader problem with MH’s approach, which unfortunately is also very common in conversations rooted in Catholic Social Teaching. It all too often overestimates the ability of governments to address economic and social problems.

　　Throughout MH, there are references to the principle of subsidiarity as an important check on state power (MH 31, 68, 71). That is a standard position of CST. This, however, sits uneasily with MH’s numerous references to the state taking on a significant role in economic development. Indeed, MH stresses that “subsidiarity does not justify the State’s disengagement but rather guides its actions” (MH 69).

　　MH also allows the state considerable latitude to exceed these limits, especially when it comes to securing equity-related goals. According to MH, “measures to ensure equity: taxation, social protection and industrial policies must correct the imbalances created by the concentration of wealth and power. Indeed, these criteria do not constitute a curb on innovation; instead, they make it civilized and humane” (MH 164).

　　“Social protection” is not defined, but presumably it refers to programs ranging from state-provided healthcare to unemployment and disability benefits. Do these necessarily translate into a more civilized and humane society? There is no shortage of evidence demonstrating how modern welfare states have contributed to the disintegration of families and undermined civil society in economically developed societies. MH itself makes several negative references to “welfare dependency” (MH 163) but does not recognize that significant segments of the population in developed economies are in a state of welfare dependency, and that too few political leaders across the ideological spectrum are willing to address this problem in any substantive way.

　　As for industrial policy, it rarely promotes equity. Its formation is an inherently political process. This means that any industrial policy is substantially shaped by the workings of interest groups, lobbyists, and legislators anxious to realize ends that have little to do with equity, or anything to do with the general welfare. That is just one reason why industrial policy is notoriously, but not surprisingly, characterized by cronyism, favoritism, and the doling out of privileges by governments and legislators to those who already have influence and power. In many cases, it morphs into outright corruption. Ironically, industrial policy embodies the concentration of wealth and power that MH denounces.

　　Economics and Human Dignity

　　The harms of state interference in the economy are well-documented in the economics and political science literature. We know a great deal now about problems like regulatory capture (something to which government regulation of AI is not immune), the tendency of bureaucrats to pursue their own agendas, and the ways in which legislators are incentivized to further their sectional goals. To be fair, MH is hardly the only encyclical to fall short by failing to grapple with these issues and their implications. But it is long past time for CST to pay attention to these insights and consider what they suggest about the state’s role in modern economies.

　　These weaknesses in MH point to a broader challenge for CST. Making contestable assertions about economic equality, or presenting questionable accounts of economic history, downplays the complexity of the problems that CST seeks to address. But it also suggests that the drafters of such texts are not as well-versed as they should be on these matters—or, worse, that they are only listening to one side of entirely legitimate debates about such topics.

　　Catholic Social Teaching does have certain strengths. It draws on a rich anthropology of the nature of human persons, which is informed by the resources provided through reason and revelation. Their persuasiveness would be enhanced, I’d suggest, if the Churchs social encyclicals engaged a wider range of economic theory, evidence, and opinion. It’s not a question of rebalancing “the left” with “the right.” It’s a matter of constructing a clearer, evidence-informed framework for ordering economic life in service of the human dignity that MH seeks to advance in the face of what may be one of the biggest changes to economic life confronting humanity.