Considering Rick Warren’s Economic Principles - Morgan Guyton
http://morganguyton.wordpress.com/2012/04/13/rick-warren-economic-principles/
America’s most famous megachurch pastor Rick Warren has gotten backlash in the Prospect, Daily Kos, Huffington Post, and other places in response to an interview with ABC’s Jake Tapper because of his views on President Obama’s campaign for economic “fairness” in tax policy and how the government should help the poor. For what it’s worth, Warren gives 90% of his income away to charity and his church does a lot of ministries with the poor in their community. There’s no question that Warren is committed to helping the poor, though he disagrees with liberals as to who should help the poor and how. The question is whether Warren’s ideological presumptions square with reality and Biblical principles.Here is the excerpt of his interview that has gotten so many people fired up:
Well, certainly the Bible says we are to care about the poor. There’s over 2,000 versus in the Bible about the poor. And God says that those who care about the poor, God will care about them and God will bless them. But there’s a fundamental question on the meaning of “fairness.” Does fairness mean everybody makes the same amount of money? Or does fairness mean everybody gets the opportunity to make the same amount of money? I do not believe in wealth redistribution, I believe in wealth creation… The only way to get people out of poverty is J-O-B-S. Create jobs. To create wealth, not to subsidize wealth. When you subsidize people, you create the dependency. You — you rob them of dignity. There are a lot of negative things that happen to us. Rather, we should be focusing on wealth creation and job creation, in my opinion…
First, regarding the question of “fairness,” Warren draws a distinction between whether fairness means that everyone gets paid the same or has the same opportunity. This seems like a reasonable distinction to make, and it would be fair if President Obama were pushing for garbage collectors to get paid the same thing that nuclear physicists make. But actually what Obama calls “fairness” is for people who make most of their income through capital gains to pay the same tax rate as people whose income is all salary. Because the long-term capital gains rate is 15% and the highest income tax rate is 35%, the wealthiest people who make most of their money passively through investments end up paying much lower tax rates than middle-class people who earn most of their money through wages.
The justification for having a lower capital gains rate has typically been to assert that lower taxes on the wealthy create more jobs. This has been the gospel truth for thirty years in the ideological movement started by Ronald Reagan, but it wasn’t the assumption when Republican Dwight Eisenhower was president in the 1950′s. He presided over a top margin tax rate of 90% (mind-boggling, in the height of McCarthy-era anti-Communism), and the economy actually greatly expanded under Eisenhower. The Dow Jones more than doubled from 288 to 634. It was an era in which jobs were created by public infrastructure projects such as the interstate highway system. The middle class has never been stronger than it was in the 1950′s.
Next, Rick Warren writes that he’s in favor of “wealth creation and job creation,” inferring a casual relation between them, again the assumption being that the more money rich people have, the more jobs they will create. The economic “recovery,” however, has demonstrated a pretty obvious rupture of the connection between wealth creation and job creation. I’m no economist, but the Dow Jones reached 14,164.53 in October, 2007, before the crash, and it has since rebounded to the low 13,000′s. So to the degree that a stock market industrial average can reflect this, our economy’s wealth has almost been recovered. But the jobs have not returned. 3.6 million jobs have been added to the economy since early 2010 in contrast to 8.8 million jobs that were lost in the recession and 4.7 million new entrants to the labor force, which amounts to about 10 million more people out of work than were out of work before the recession.
Thus our economy is now very obviously creating wealth without creating jobs. If Obama were a dictator presiding over a state-run economy, it would be reasonable to blame him for the failure of the recovery to regenerate jobs, but his policies have not stopped the regeneration of wealth that’s supposed to automatically result in new jobs. So it doesn’t seem unreasonable for him to ask whether low capital gains tax rates are really benefiting the overall economy when they seem to be creating wealth without jobs. Perhaps Eisenhower had a better approach.
Next I wanted to look at Rick Warren’s assertion that government shouldn’t “subsidize” poor people and “create dependency.” I agree with this basic principle as heartily as I agree that garbage collectors and nuclear physicists shouldn’t get the same salary: people shouldn’t get blank checks for sitting around being lazy. It’s reasonable in the abstract. The question is whether this is an accurate assessment of what government programs actually do or a recycled talking point from the time before Clinton’s welfare reform did away with blank checks for the poor.
I’m not sure how offering free health coverage through Medicaid to poor children creates dependency. What about Head Start, the free preschool program for poor kids who can’t afford paid preschool? That seems like it’s more about equalizing opportunities than giving blank checks. I ran an unemployment support group last year at my church in which a woman was collecting government unemployment benefits. She had to file weekly reports showing that she had applied for at least three jobs in order to stay qualified. It seemed to me like it was geared toward keeping people motivated rather than creating dependency. I suppose someone could argue that food stamps subsidize poor people, but I’ve never known anybody who has used them who didn’t also have a job that was simply insufficient to pay all their living expenses.
Finally, I want to consider Rick Warren’s opposition to “wealth redistribution.” It seems like a completely un-American concept, since private property is so integral to our notion of freedom. How can it possibly be right for the government to take what I’ve earned and give it to someone else? Here’s the problem: it’s totally Biblical, that is if we take seriously the same Old Testament book that’s so important to social conservatives on a different issue — Leviticus. In Leviticus 25, God calls for the Israelites to have a year of jubilee every 50 years in which all property that has been sold would be returned to its original owner (vv. 25-28) and people whose poverty had forced them to sell themselves into slavery would be set free (vv. 39-40). Every family would then start over with their property having been reset to equal levels. The foundation for these commands is verse 23 in which God claims sole proprietorship over the land of Israel: “The land must not be sold permanently, because the land is mine and you reside in my land as foreigners and strangers.”
If we followed Leviticus 25′s prescriptions for wealth redistribution, it would basically amount to having an estate tax of 100% imposed on the population every 50 years with everyone given back the same amount of wealth afterward to start from scratch. In other words, it would be “fairness” in precisely the form to which Rick Warren objects. Since we live in a completely different historical context than Leviticus, it’s reasonable to say that some of its commandments can no longer be feasibly applied today, but we should at least retain the spirit of them. If all property belongs to God and we are all His tenants and stewards in everything, how should this shape our attitude about whether we should be taxed a lower percentage of our passively received investment profit than other people pay for the wages they earn?
Many bloggers have unfairly cast Rick Warren as being opposed to helping the poor. It’s pretty clear from the ministries of his church and his personal philanthropy that Warren believes in doing things on the grassroots level to help the poor. He just doesn’t think it’s the federal government’s role. That’s a fine debate to have, as long as Warren conforms his abstract ideological principles to the economic realities that are manifesting themselves around us today. And it might be time for Warren to spend “forty days in the word” of Leviticus 25.
America’s most famous megachurch pastor Rick Warren has gotten backlash in the Prospect, Daily Kos, Huffington Post, and other places in response to an interview with ABC’s Jake Tapper because of his views on President Obama’s campaign for economic “fairness” in tax policy and how the government should help the poor. For what it’s worth, Warren gives 90% of his income away to charity and his church does a lot of ministries with the poor in their community. There’s no question that Warren is committed to helping the poor, though he disagrees with liberals as to who should help the poor and how. The question is whether Warren’s ideological presumptions square with reality and Biblical principles.Here is the excerpt of his interview that has gotten so many people fired up:
Well, certainly the Bible says we are to care about the poor. There’s over 2,000 versus in the Bible about the poor. And God says that those who care about the poor, God will care about them and God will bless them. But there’s a fundamental question on the meaning of “fairness.” Does fairness mean everybody makes the same amount of money? Or does fairness mean everybody gets the opportunity to make the same amount of money? I do not believe in wealth redistribution, I believe in wealth creation… The only way to get people out of poverty is J-O-B-S. Create jobs. To create wealth, not to subsidize wealth. When you subsidize people, you create the dependency. You — you rob them of dignity. There are a lot of negative things that happen to us. Rather, we should be focusing on wealth creation and job creation, in my opinion…
First, regarding the question of “fairness,” Warren draws a distinction between whether fairness means that everyone gets paid the same or has the same opportunity. This seems like a reasonable distinction to make, and it would be fair if President Obama were pushing for garbage collectors to get paid the same thing that nuclear physicists make. But actually what Obama calls “fairness” is for people who make most of their income through capital gains to pay the same tax rate as people whose income is all salary. Because the long-term capital gains rate is 15% and the highest income tax rate is 35%, the wealthiest people who make most of their money passively through investments end up paying much lower tax rates than middle-class people who earn most of their money through wages.
The justification for having a lower capital gains rate has typically been to assert that lower taxes on the wealthy create more jobs. This has been the gospel truth for thirty years in the ideological movement started by Ronald Reagan, but it wasn’t the assumption when Republican Dwight Eisenhower was president in the 1950′s. He presided over a top margin tax rate of 90% (mind-boggling, in the height of McCarthy-era anti-Communism), and the economy actually greatly expanded under Eisenhower. The Dow Jones more than doubled from 288 to 634. It was an era in which jobs were created by public infrastructure projects such as the interstate highway system. The middle class has never been stronger than it was in the 1950′s.
Next, Rick Warren writes that he’s in favor of “wealth creation and job creation,” inferring a casual relation between them, again the assumption being that the more money rich people have, the more jobs they will create. The economic “recovery,” however, has demonstrated a pretty obvious rupture of the connection between wealth creation and job creation. I’m no economist, but the Dow Jones reached 14,164.53 in October, 2007, before the crash, and it has since rebounded to the low 13,000′s. So to the degree that a stock market industrial average can reflect this, our economy’s wealth has almost been recovered. But the jobs have not returned. 3.6 million jobs have been added to the economy since early 2010 in contrast to 8.8 million jobs that were lost in the recession and 4.7 million new entrants to the labor force, which amounts to about 10 million more people out of work than were out of work before the recession.
Thus our economy is now very obviously creating wealth without creating jobs. If Obama were a dictator presiding over a state-run economy, it would be reasonable to blame him for the failure of the recovery to regenerate jobs, but his policies have not stopped the regeneration of wealth that’s supposed to automatically result in new jobs. So it doesn’t seem unreasonable for him to ask whether low capital gains tax rates are really benefiting the overall economy when they seem to be creating wealth without jobs. Perhaps Eisenhower had a better approach.
Next I wanted to look at Rick Warren’s assertion that government shouldn’t “subsidize” poor people and “create dependency.” I agree with this basic principle as heartily as I agree that garbage collectors and nuclear physicists shouldn’t get the same salary: people shouldn’t get blank checks for sitting around being lazy. It’s reasonable in the abstract. The question is whether this is an accurate assessment of what government programs actually do or a recycled talking point from the time before Clinton’s welfare reform did away with blank checks for the poor.
I’m not sure how offering free health coverage through Medicaid to poor children creates dependency. What about Head Start, the free preschool program for poor kids who can’t afford paid preschool? That seems like it’s more about equalizing opportunities than giving blank checks. I ran an unemployment support group last year at my church in which a woman was collecting government unemployment benefits. She had to file weekly reports showing that she had applied for at least three jobs in order to stay qualified. It seemed to me like it was geared toward keeping people motivated rather than creating dependency. I suppose someone could argue that food stamps subsidize poor people, but I’ve never known anybody who has used them who didn’t also have a job that was simply insufficient to pay all their living expenses.
Finally, I want to consider Rick Warren’s opposition to “wealth redistribution.” It seems like a completely un-American concept, since private property is so integral to our notion of freedom. How can it possibly be right for the government to take what I’ve earned and give it to someone else? Here’s the problem: it’s totally Biblical, that is if we take seriously the same Old Testament book that’s so important to social conservatives on a different issue — Leviticus. In Leviticus 25, God calls for the Israelites to have a year of jubilee every 50 years in which all property that has been sold would be returned to its original owner (vv. 25-28) and people whose poverty had forced them to sell themselves into slavery would be set free (vv. 39-40). Every family would then start over with their property having been reset to equal levels. The foundation for these commands is verse 23 in which God claims sole proprietorship over the land of Israel: “The land must not be sold permanently, because the land is mine and you reside in my land as foreigners and strangers.”
If we followed Leviticus 25′s prescriptions for wealth redistribution, it would basically amount to having an estate tax of 100% imposed on the population every 50 years with everyone given back the same amount of wealth afterward to start from scratch. In other words, it would be “fairness” in precisely the form to which Rick Warren objects. Since we live in a completely different historical context than Leviticus, it’s reasonable to say that some of its commandments can no longer be feasibly applied today, but we should at least retain the spirit of them. If all property belongs to God and we are all His tenants and stewards in everything, how should this shape our attitude about whether we should be taxed a lower percentage of our passively received investment profit than other people pay for the wages they earn?
Many bloggers have unfairly cast Rick Warren as being opposed to helping the poor. It’s pretty clear from the ministries of his church and his personal philanthropy that Warren believes in doing things on the grassroots level to help the poor. He just doesn’t think it’s the federal government’s role. That’s a fine debate to have, as long as Warren conforms his abstract ideological principles to the economic realities that are manifesting themselves around us today. And it might be time for Warren to spend “forty days in the word” of Leviticus 25.
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