In a private e-mail list exchange in which we’re discussing the Vatican’s document on the economic crisis, and Pope Benedict’s 2009 encyclical on same, one of the contributors raised a good question. These aren’t quiet the terms he used, but this is the gist of it:

Global public and private debt exceeds a staggering 300 percent of global GDP. We are now living under conditions in which giant financial entities — investment banks, in particular — undertake operations that pose a direct and grave threat to the common good. This is what “too big to fail” means: that failure of the institutions in question poses such a catastrophic risk to the wider economy that the community is held hostage to their fortunes.

These are entities whose actions stand to dramatically effect every household in America, but who are not accountable. Indeed, whenever the least attempt is made to reform them to keep them from blowing up the entire economy, they and their defenders scream, “Socialism!”

This week’s Vatican document, building on previous Catholic social teaching, acknowledges that the power and the nature of the global economy has outgrown the power of nation-states to subordinate economic activity to the common good. I am reminded of a remark made to me 15 years ago by a friend who is now a fairly well known financial reporter, but who was at the time just getting started on the economics beat, to which she’d transferred from covering politics. She said until she started covering the international currency markets, she had a completely unrealistic idea of how power was actually distributed in our world. She actually thought the U.S. president was a more powerful figure than he is.

I think it’s incumbent on us to admit that the Church’s analysts are substantially correct in their diagnosis of the situation. The power of global financial entities has outstripped the power of nation-states to subordinate their activity to the common good, even as the commons cannot be protected from the irresponsibility of these entities. The solution proposed by the Pontifical Council is a form of global political and economic common governance in which nation-states relinquish sovereignty to a significant degree in exchange for gaining a measure of accountability and control over global capital.

It is fairly clear why an American would find this dangerous and unacceptable (less so why a Bolivian or a Ghanian would), and why it would never fly. Yet the problem still remains. If not global government, what? This is a huge and complex problem. The Vaticanistas may have the wrong solution, but at least they’re facing it. We’re not.

My fear is that we won’t be able to bell this cat using the means at our disposal, and the resulting global economic catastrophe will cause the masses to favor relinquishing sovereignty to a global political and economic entity for the sake of their own security.