Economics in the Christian Worldview – Part 1

Christianity teaches that greed is evil.
Capitalism is the belief that greed is good.
Therefore, capitalism contradicts Christianity.

And that’s about as far as many Christians go in their analysis of economics. Some will look for examples of their premises. They’ll find a corrupt businessman who schemed his way through insider trading into bankrupting his company to line his pockets*. They’ll find a CEO who makes fifty million dollars a year and call it greed and corruption. His employees don’t make that much! They’ll assume that profits are driven by greed, coming at the expense of someone else, so that non-profits must be preferred to corporations.

The argument is flawed. Not in its reasoning, but in the premises. Christianity indeed teaches that greed is evil and anyone who would contradict this would contradict Christianity. But, despite the popularity of the opinion that capitalism is based on greed or somehow rewards it, the opinion is false. Not only false, but dangerous.

In a world of scarce resources which have alternative uses (to quote Thomas Sowell), we must have some sort of economic system in place. Of the many questions that we could ask about economics, the most important one is: Which system is best allocates these scarce resources? And by “best”, we mean, which one moves them to where the demand for them is highest. That is, in which system do we least feel the fact of scarcity? We must answer all other questions by the light of the answer to that one.

Today, I want to start a series of posts on economics and their relationship to the Christian religion. These will be informal essays. I’m not trained in economics, though I read books about economics as others might read fiction: for fun.

Revelation

Many Christians have strange beliefs about revelation. They’ll say that the Bible is the total sum of truth, that nothing outside of Scripture is true, or that the Bible is the ultimate source of knowledge on all topics.

These things are all clearly false. The Bible doesn’t contain the statement “the Bible is the total sum of truth”, and it would need to if that statement were true. Canada is north of the United States, yet the Bible doesn’t say so. The Bible doesn’t say anything about how to program a thermostat. If it were the ultimate source of knowledge on all topics, that would include the thermostat in your house.

All truth is God’s truth. That doesn’t mean all truth needs to be revealed by divine revelation. Some truth does, but we can learn a lot of things from observation and reason, both of which are given to us by God, who expects us to use them. The sort of divine revelation we have in Scripture is called “special revelation”. The sort of revelation we have access to by our senses and our reason is called “general revelation”. Scripture acknowledges general revelation throughout. In most passages, it even presumes it. Romans 1 is particularly clear about it.

The point is while we need to consult the Bible for what God says about economics, money, greed, and work, we also need to bring our knowledge about the world in as well, to understand what we should really believe. The Bible is not an economics textbook. The point of the Bible is not to tell people which system they should use to efficiently move scarce resources with alternative uses.

No one in history would have thought of the Bible as an economic textbook, either. Some books (Leviticus and Deuteronomy) may contain entire legal systems, but even they don’t read like textbooks, describing economics generally and then comparing competing systems. Beyond those books, no other portion of the Bible is given to the purpose of creating an entire civilization, and so economic ideas are mentioned incidentally everywhere else.

Good hermeneutics (interpretation) of Scripture begins by understanding the genre of each book, the intended audience of each book and how they would have understood it, and the meaning the author was attempting to convey. Every passage must be kept in context while attempting to figure these things out. The first task will be to find the passages that deal with economic principles (no matter how broadly). The second will be to apply a good interpretation to those passages.

So what does the Bible say?

Economics in the Bible

While the Bible isn’t a book about economics, it has a lot to say about money and economies. The passages which speak about money can be divided into a few groups.

Greed is Evil

Luke 12:15 says Then he said to them, “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.”

And 1st Corinthians 6:10 says “…nor thieves nor the greedy nor drunkards nor slanderers nor swindlers will inherit the kingdom of God.”

It’s important to define greed, since the term can be ambiguous and is open to abuse. It is not greedy to want to acquire wealth to support a family. It is not greedy to think wealth is good or important.

In fact, greed is not a desire for wealth in the first place. Greed is intense, selfish, and unbalanced desire. It views the acquisition of wealth as an end in itself. Greed views wealth as more important than it really is. It’s the opposite of generous. Poor and rich people alike can be greedy, just as they can both be generous. This is a very important clarification, as will be seen.

Wealth is a Reward

For those who work diligently, wisely, and fairly, wealth comes as a natural reward. Proverbs 10:4 says “Lazy people are soon poor; hard workers get rich.”. Many other proverbs echo this: Proverbs 13:11, 14:23, and 20:13 for example. These passages and those like them show that wealth acquired dishonestly will usually disappear.

Proverbs 21:17 hints at a fundamental truth about wealth: that the actions and character which tend to make someone wealthy tend to be good things, while evil actions and bad character tend to make someone poor. These aren’t universal, but they are typical and reliable.

Money Must be Handled Justly

James 5:4 says “Behold, the wages of the laborers who mowed your fields, which you kept back by fraud, are crying out against you, and the cries of the harvesters have reached the ears of the Lord of hosts.”

When you owe people money for work they do for you, you are obligated to pay them. And if you have worked for someone else for a wage, they are obligated to pay you. Passages like this must be taken in proper context. The preceding verses, when used in isolation, appear to condemn wealth altogether, but verse four makes it clear that what is condemned is failure to pay wages, not wealth.

Generosity is good and stinginess is bad. To act justly with money, we need to be generous with what we have.

A Summary

There are hundreds of verses about money in Scripture, but they broadly fit into the three groups above. Money must be handled justly and wisely, wealth is often a reward, and greed is always evil. But how do we bring these principles together? What kinds of conclusions can we draw from these raw materials?

First, wealth is good. Often given as a reward, it is used to alleviate suffering, feed hungry people, and free our time to pursue things beyond survival.

Second, wealth is dangerous. Those who are wealthy can be tempted by their wealth to do evil things. They can hide from the reality of their own mortality, they can trust in riches, and they can imagine their wealth to make them better than those who don’t have as much as they do. Importantly, this seems to be a universal human problem. There aren’t intrinsically “wealthy people” and intrinsically “poor people”, such that a poor man wouldn’t be tempted in the same way if he won the lottery. In fact…

Third, wealth is usually acquired as a result of doing good. Many of the wealthiest people we can read about in Scripture acquired their wealth by diligently working and they learned to handle the increases of wealth little by little. It’s not unlikely that if they acquired their wealth suddenly, they’d have squandered it. Wealth tends to come to those who are capable of handling.

There’s a problem here. It’s almost a contradiction. Most people hold it in the back of their minds and never resolve it:

  1. Wealth (often) comes to those who do good things
  2. Wealth (often) tempts those who have it to do evil things

How do we resolve this? If wealth is good and God gives it as a reward, doesn’t that mean He then tempts us? If wealth is good, why does it cause evil? Is it a cycle where good people work hard, are rewarded, and become evil people?

We can’t answer these questions or this apparent problem without understanding economics and the history of economic ideas. Why do I say that? Part 2 coming soon!


*  One of the most well-known insider traders is the patriarch of the Kennedy family. One of the great ironies about economic corruption is that the party which bemoans free trade the most is the one most often involved in the corruption of free trade.

Minimal Respect for Minimalism

I think minimalism is overrated.

I could be ironic and end my post with that, but I’d rather defend my view. In the sense I mean the term, I’m not referring to minimalist art (which isn’t overrated, but terrible), where the term originated. Minimalism is one voice in our cacophonous Zeitgeist. It declares “Your possessions rule you. Banish them and rule yourself.” It usually amounts to people bragging about how few possessions they have.

As trendy as minimalism is, I think it suffers from three fundamental flaws:

  1. It depends on a flawed theological view of ownership.
  2. It is a hobby for wealthy people with tech jobs and no one else.
  3. It pretends to make people care less about their belongings while making people spend more time thinking about their belongings.

First, minimalism presumes that ownership is inherently bad and possessions are a necessary evil. On the contrary, and as I’ve written before, owning possessions – including large, maintained, curated collections – is actually good for us. We are creatures who create, and creation requires some maintenance. Especially for men, I’ve found, keeping good collections is a source of virtue. This makes sense; the created world has been declared good already. Why arbitrarily limit yourself when it comes to possessions just for the sake of a trend?

Second, minimalism is not something that anybody can do whenever they want. It requires some serious wealth and a particular sort of job. I see this all the time with people who blog or build websites. They seem to think that they’ve become enlightened by some fad like minimalism or a 4-hour work week, and they write books and articles which make them even more money in the process.

But imagine a carpenter trying to live the minimalist life. A common minimalist challenge is to live with 100 items or fewer. Have you ever tried to run a wood shop with one hundred items or fewer? As an amateur woodworker myself, I own well over one hundred hand tools, let alone power tools. And then there’s all the stains and finishes. And speaking of the 4-hour workweek, exactly how do I build bookshelves at 10x speed?

Or consider a plumber, who probably carries well over one hundred tools in his truck from job site to job site, with hundreds more in a shop.

No one working a trade – or any job outside of the tech world – can do their job with a laptop and a backpack. That’s a luxury for very specific jobs, as apparently is the smugness that accompanies it.

It’s more than just certain jobs which are incompatible with minimalism. The fact is, the worse off you are financially, the more you need to rely on keeping large stocks of things. A wealthy person can afford to replace his overpriced macbook if it falls to the ground. A poor person needs to keep old PC’s around since he can’t replace anything. A wealthy person can afford minimalism because he takes no risk in giving away the insurance of holding extra possessions. A poor person’s wealth is probably not much more than that insurance.

And then there are families, which pose a whole new set of problems. Single men and women might get away with living out of a backpack, but as a father of two young boys, I can barely survive a car ride without bringing multiple bags of baby gear with me. That’s three categories of reasons to dismiss minimalism as a luxury of a particular group of people. Those people are free to do as they please, but it would be better for everyone if they realized just how unique their situation is.

Finally, and probably most importantly, minimalism undermines its own efforts. If you spend your time thinking about how much you think about your possessions, you will not improve your situation by thinking about them even more. Getting rid of junk you don’t want is one thing, but constantly reassessing which possessions you can part with is still a way of thinking about your possessions.

A much better thing to do with your time is to not think about your possessions at all. If you have clutter you don’t like, spend a weekend getting rid of junk you don’t want. Otherwise, don’t worry about it. In doing that, you’ll accomplish the stated goal of minimalism better than any minimalist approach.

You can be ruled by a desire to acquire more things, but you can also be ruled by a desire to control what you possess through minimalism. Stop worrying about it. There are more important things to spend your time thinking about.

A Critique of Salary

Articles about business are often full of jargon, ugliness, and imprecision, but I recently discovered an article on salaries that seems to avoid egregious examples of those linguistic evils. I had been looking into the origin of the term “salary” and the bureaucratic inventions based on it: “salaried exempt” and “salaried non-exempt.”

I’m a software engineer, and like most of the people who work on software, I am paid according to the “salaried exempt” rules. This is like a normal salary (I am paid a certain amount of money over the course of the year for my work, rather than per hour), except that my company is not required to pay me if I need to work extra hours to get my job done. Not all companies don’t abuse this policy, and my own actually provides some extra money to a point for overtime. Nevertheless, I have some critical thoughts of the entire concept of salary.

I’m not writing this to just summarize my thoughts on salary, but to compare and contrast them with the article I mentioned, which is titled “4 reasons why companies can ask their employees to work for ‘free'”. Lack of capitalization aside, I already have some problems with this. I’m not interested in why a company can ask their employees to work for free. The answer is intuitively obvious: it’s legal. The author talks about the legality of salaried employees being asked to work extra hours, so at least she covers the title. However, out of her four sections, only half talk about why employers can do this. The other half talk about why they would choose to.

A leaked Urban Outfitters memo from 2015 was the motivation for the article, itself written two years ago. It begins (emphasis mine):

The leaked Urban Outfitters memo asking salaried employees to volunteer one or more weekend shifts at an Urban Outfitters fulfillment center to pick, pack and ship merchandise is really no story at all, despite Internet shaming and sensational claims that Urban Outfitters is making management employees work for “free.”  The request of Urban Outfitters is not unusual; it is just unusual that the request was leaked to the media.  Employers regularly require exempt employees to go over and above a 40-hour work week without additional pay, and this approach is appropriate under wage-hour laws.

My disagreement with the article begins with the first paragraph. We’ll come back to the use of the word “free”, used to describe the hours worked by many salaried employees beyond the contractual obligation they have, and focus for now on the line “this approach is appropriate”. Why is it appropriate? Because it is legal. This is the theme of the article. The salary system in place is legitimate because it is legal, which is almost a tautology. The fact is, I don’t think there are many good reasons to have this system, and I think a lot of people realize that and appeal to the legality of it as justification.

And, while some media commentators have dubbed this as “working for free,” the reality is that the employees are not working for free.  They have agreed to work all required hours in exchange for a certain salary.

This is true, but the “required hours” amount to forty hours every week. What value is an agreement to work forty hours a week if this number is merely a suggestion?

After all, remember that there are salary requirements for exempt employees, so those who are being asked to “volunteer” are being compensated at a higher pay grade, at or above a salary set by our federal and state governments pursuant to public policy considerations.  Therefore, it is in fact “fair” to ask exempt employees for the extra work…

“Fair” in the context of this government means “legal”. It is constantly the reference point for fairness and appropriateness. I think it’s a bad standard though; why is the law written as it is written? The real question is what objectively determines fairness. The author tries to answer this by saying the quantity of money being paid justifies overtime. The salary for exempt employees exceeds an arbitrary government limit in the Fair Labor Standards Act, and is thus “fair”. After another reference to the law, she goes on again to give more rationale:

 The increased responsibility and salary levels of exempt employees also means they likely have more bargaining power in the marketplace and freedom to leave an oppressive employer, so government is less concerned about extra “unpaid” work in their case.

I don’t care what the government is concerned with. I don’t care what the government permits under law. I think it is wrong to require employees to work more hours than they are contractually obligated to work, and I’m convinced the entire concept of “salaried exempt” is absurd. The fact I have “more bargaining power” doesn’t offset this, and it turns out that many salaried exempt positions require such specialized skills that this bargaining is done by more people for fewer jobs anyway.

 1. Employees who are exempt can work over 40 hours without additional compensation.

Her first argument is a restating of the law. Of course employees can be required to work over forty hours without additional pay. We’ve already established this. But the interesting question is why this ought to be the case. Yet another attempt to rationalize this is provided:

Exempt employees take customers to dinner after hours without additional compensation.  They answer after-hour calls and emails without additional compensation.  This happens all the time.  And, it’s legal.

Employees often do things after work hours for which they are not paid and it is legal, so therefore companies can ask employees to work more than forty hours a week. It’s not really an argument, but a restating.

2. Volunteering for additional work does not change the employee’s primary duty.

Exempt employees who “volunteer” for  production type duties (e.g. pick, pack, and ship merchandise) do not have their jobs transformed into hourly non-exempt jobs as long as their primary duty remains exempt.

Again, another restating of the fact that companies can do what we’ve already established they can legally do. It gets a little more interesting after this:

3. Production work doubles as leadership training for exempt workers.

…Rolling up their sleeves to help might provide a real eye-opening education for how hard the hourly employees work and how decisions by exempt  personnel affect those hourly workers.  This could be valuable training for managers, administrators and professionals.  Also, isn’t rolling up your sleeves to perform “undesirable” tasks one definition of leadership?  Leaders should not be above any task, no matter how “menial.”

It isn’t doing undesirable tasks that repulses people from the concept of “salaried exempt”. It’s doing those tasks without getting paid for the extra hours worked. This rationale doesn’t even enter into the discussion when the jobs in question are in world of engineering, since there often isn’t any sort of “leadership” in the sense described here going on.

The fact is, we are no closer to answer as to why this is a good practice than we were when we started. One final reason is given:

4. ‘Volunteer’ work can reduce overtime.

Reducing overtime of hourly workers by asking exempt employees to pitch in, as long as the company does it legally, is a perfectly legitimate business decision.

Some people – who don’t get paid extra for working extra hours – can work in place of those who do get paid extra for working extra hours, which if done legally, is a legitimate business decision. Because, as we’ve already seen many times, it is the legality of the practice that makes it fair, legitimate, and appropriate. Overtime doesn’t reduce overtime, even if it means the business isn’t required to pay as much if they shift the employees working overtime around.

My response to all of this is pretty straightforward. An employee who agrees to a contract to work forty hours each week and then proceeds to do just that for $50,000 a year is making $50,000 / (52 * 40) ≈ $24 dollars an hour. Another employee who agrees to the same contract but who is asked to work evenings and weekends, averaging 50 hours of work a week is making $50,000 / (52 * 50) ≈ $19 an hour. This makes sense; 25% more hours worked for the same amount of money means a corresponding decrease in hourly pay.

A government or business can come along and say “we’re paying you for a certain amount of work, not a certain number of hours”, but this isn’t entirely accurate. If it were, an employee could leave the office after getting their work done. This rarely happens for “salary exempt” employees. It’s more accurate to say that “salary exempt” means working a minimum of forty hours a week and a maximum of whatever the managers of the company ask them to work.

While I don’t think the law is wrong to permit what it does, I think people should be a bit wiser than merely repeating what the law says to justify the behavior of companies. I understand that overtime is sometimes required. Companies can’t anticipate everything that might get in the way of an important deadline, and sometimes there isn’t time to hire and teach new employees (who would need to be laid off once the deadline is achieved anyway). This is fine and even fair as an emergency tactic, but it is a terrible policy for normal work.

I’ve often seen companies require employees to work extra hours to avoid hiring new employees, even though the employees working overtime were hired under the pretense of working forty hours a week. It might be legal, but it isn’t fair. I don’t think the government should come and sue the companies doing this sort of thing, but the employees working the mandatory overtime should probably look for jobs elsewhere. The market has already begun correcting this abuse, and companies are even advertising their commitment to a forty hour workweek as a perk.

Medieval peasants worked fewer hours than we wealthy Americans do, and it’s probably part of the cause of our moral decay as a civilization that we give so little time to genuine rest. Companies expect their employees to give up anything to get their jobs done when it turns out that many of the things employees give up are more valuable than the work.

Pre-Existing Conditions

President Trump recently signed a variant of Obamacare into law. Despite being pretty consistent with the law it replaced, many articles (and many comments responding to those articles) have brought up all of the old debate topics that popped up when Obama signed the original massive healthcare bill.

One topic in particular that seems to consistently divide people is insurance coverage of pre-existing conditions. If someone wants to buy health insurance but already has a medical condition for which health insurance would help alleviate costs, some argue that it is cruel to deprive them of the opportunity. Who needs it more, after all?

Answering this concern is straightforward and simple, and it’s a good lesson in how to respond to fuzzy emotional complaints (which are a terrible grounding for law). There are straightforward economic reasons that it’s actually impossible for health insurance to cover pre-existing conditions.

By “insurance”, I am referring to a system in which a large number of people pay money in proportion to some risk they may incur into a fund and out of which fund a small percentage of those people may withdraw money should they realize the risk accidentally. Paying money “in proportion to risk” simply means that some people are more likely to incur whatever risk the insurance hedges against, and so pay extra as a result to balance the flow of money in and out of the fund. The reason the risk must be realized accidentally is to avoid fraud.

All insurance works this way. Millions of people pay a car insurance company to protect their cars. Younger drivers, elderly drivers, and drivers with a history of traffic violations all pay more. More expensive cars also end up costing more, regardless of who is driving them. Thankfully, most people don’t get into car accidents, and so most of the people paying into the system never get anything out of it but peace of mind (or, in some places, the ability to legally drive their car). If someone goes out and bashes their car with a baseball bat in order to obtain a new one from insurance, their insurance company will decline the request; fraud would ruin the system.

Now imagine if suddenly, car insurance companies were required to cover cars which are already damaged. If you don’t have car insurance and you get into an accident, the car insurance company under penalty of law cannot decline you as a client. Nor can they hold you as a client indefinitely; you can always leave an insurance contract after a period of time. What would this do to the system?

Well, no one would buy car insurance until they got into a car crash. Why pay for something that does absolutely nothing for you? But can you see what this does to the equation? If 1000 people each pay $100 into car insurance each year and only 10 get into a car crash (we’ll estimate $10,000 as an average cost of each accident), then you have 1000 x $100 = $100,000 coming into the fund and 10 x $10,000 = $100,000 going out.

But if car insurance can be purchased on the spot even after a car accident to cover the car accident, 990 of those people won’t be paying anything. Why would they! They could get the benefits of insurance any time they actually needed them. The new equation is 10 x $100 = $1000 coming into the fund and 10 x $10,000 = $100,000 going out. $99,000 short to cover the expenses. The insurance company would foot the bill and would close. No company could take $99 in loss for every $1 of income.

This same analysis applies to medical insurance. No one would purchase medical insurance until they had a condition if it covered “pre-existing conditions”. This means that the only people paying into the fund are those who need to withdraw from it. You can hopefully see where this is going: “buying insurance” would cost as much, if not more, than paying out-of-pocket for all medical costs.

“But wait”, I hear you say. “What if the government also forced everyone to buy insurance?” This is exactly what they’d need to do. But now you’ve got an even bigger problem. First, in the United States, it is simply unconstitutional for the government to force citizens to buy a product or service. The Supreme Court, sympathetic to Obama, knew this. That’s why, despite Obama selling his Obamacare plan as something that would not raise taxes, the Supreme Court was forced to say that it increased taxes. Without forcing citizens to pay into the system, it would collapse.

But this isn’t the only problem, and it’s the reason the system collapses everywhere it is tried.

The more that insurance covers, the more expensive it is. That seems pretty straightforward. But the more it covers, the more expensive it also makes the services it covers. When insurance is used exclusively to pay for a particular service – and no one ever needs to pay out-of-pocket for it – that service increases in price. There’s no competition or bartering going on. The insurance company can raise rates and there isn’t much you can do about it.

This leads to a single-payer sort of system, where insurance companies simply can’t keep up with the demands of the government and are eventually just made into a government bureaucracy of their own. This costs incredible amounts of money (as it automatically raises the costs of services without limit), and is unreliable over longer periods of time and over populations with varied wealth and medical needs.

Much of this is beyond the scope of the problems with single-payer health care, but you can see already how it is all tied together, one problem necessitating a solution which itself becomes a problem, etc. The point is, any insurance which purports to cover “pre-existing conditions” isn’t insurance. It’s just an extra cost and added hassle on your way to paying the full cost of whatever service you want.