Washington, the Catholic Church and Hold-up

With deference to Steven Levitt and Stephen Dunbar, you shouldn't mix apples and oranges and that is exactly what the Catholic Church and Washington D.C.'s city government have done when they became partners in distributing aid to the poor and needy.  Emily Esfahani Smith explains that the partnership benefits the District and the needy within it ("Washington, Gay Marriage and the Catholic Church," the Wall Street Journal, January 9, 2010).

...the District outsources many of its social services to Catholic Charities, which runs the charitable services of the archdiocese. These charities provide a variety of services—including shelters for the homeless and food for the hungry—to about 124,000 needy residents in the region (which also includes a portion of Maryland). The archdiocese also oversees St. Ann's Infant and Maternity Home, a care center for foster children, and it administers adoptions for the District. For this work, Catholic Charities receives approximately $20 million in contracts, grants and licenses from the city. It bolsters these funds with $10 million of its own money and a network of 3,000 volunteers.

Let me begin with a disclaimer.  The opinions I am about to express apply not only to Catholics, but agnostics, atheists, Baptists, Jews, Mormons, Muslims and other religious group.  Nor am I addressing the issue of gay marriage.  I don't like mixing church and state through charities because I like bright distinctions between them and I believe that society is best served when those distinctions are maintained.  I don't want avenues of influence to develop through the tangled webs of contractual arrangements.  I don't want those lines of influence used to change the policy of the other.  In this instance, the city government is engaged the practice that economists call hold-up.[1]  It is changing the terms of a contract after the Catholic Church has made an irreversible commitment to aid the poor in part with government funding in order to pressure the Archdiocese to change its stance on gay marriage.  Smith writes,

By passing gay marriage, the City Council has put the Catholic Church, or more accurately, the Archdiocese of Washington, in an awkward position. Either the church will have to recognize gay marriage or it will be forced to abandon a large portion of its charitable programs...

If same-sex marriages are legalized, which seems inevitable, Archbishop Donald Wuerl of Washington points out that the church will find itself in violation of the new law if it continues its city-sponsored social services programs. Why? Because city contractors are required to abide by all of the District's laws and there are provisions in the bill requiring the church to acknowledge gay marriage by offering employment benefits to same-sex couples and by placing children with gay adoptive couples.

The poor and the needy are the baby the City government and the Catholic Church are about to split and using the wisdom of Solomon, the organization that seems most willing to compromise seems to have the best interest of the poor in mind.  The City Council could add a religious exemption to its bill as most governments at all levels have done, but they won't.  They are playing hardball with the welfare of the poor.  As Smith notes,

The archdiocese isn't willing to play hardball with the city. Susan Gibbs, a spokeswoman for the archdiocese, told me that her organization is committed to serving the poor, regardless of what the laws are in the District, and that it is now looking "to find a way to enable Catholic Charities to keep working in partnership with the city."

So either the archdiocese will drop benefits for all employees—if it doesn't provide benefits to married couples, it won't have to offer them to same-sex couples—or it will follow in the footsteps of Georgetown University, the District's largest Catholic organization. There, an employee, whether gay or straight, married or not, receives full benefits for himself plus one legally domiciled member of his or her household. This would allow the archdiocese to save face by pretending it isn't knowingly recognizing gay marriages.

Either accommodation would allow the archdiocese to continue to run its charities. Yet both require a change within the archdiocese. The first would force the archdiocese to drop benefits it had provided in support of traditionally married couples, while the latter would entail a dishonest dodge from an institution built on sincere faith.

It is evident that the Catholic Church is more concerned about the poor than the D.C. City Council.

[1]  Economists believe that hold-up results in less contracting than is socially desirable, or in this case, less aid to the poor.  I offered the opinion that no contracting between the two is desirable based on the unsupported hypothesis that the contracting will mute the desirable characteristics of church and state.