The “Give a Man Fish…” saying is outdated. Here’s a realistic version addressing the realities of corporate capitalism.

Those who oppose government assistance, because it supposedly creates dependency, love to say, “Give a man a fish; he’ll eat for a day. Teach a man to fish; he’ll eat for a lifetime.” That doesn’t reflect American reality, so I extended the saying to make it more accurate.

Give a man a fish, and he’ll eat for a day.
Teach a man to fish, and he’ll eat for a lifetime.
Unless you hoard all of the fishing rods to yourself,
Then the man must fully depend on you for food.

If the man asks to use one of your many fishing rods so he can fish and feed his family,
Tell him that he first needs a fishing degree from your fishing college,
And the cost for him to get that degree is $100,000.
When the poor man says, “I can’t afford $100,000. I don’t even have $100,”
Tell him that you will loan him the money,
And that he can pay it back with interest and be indebted to you for life.

Once he gets the fishing degree and asks you for a fishing rod,
Say to him, “You may use my fishing rod,
But you must give all of the fish you catch to me, because I own the rod and the lake,
And then I will give you your share for the work you’ve done.”
Once the poor man fishes many hours in the heat of the sun and the cold of the night,
Enduring sunburn, blisters, sore legs, and an aching back,
And then brings you the 100 fish he worked so hard to catch,
Keep 99 of the fish for yourself and give him one fish as compensation.
When he complains that the compensation is unfair,
And that his family cannot survive on one fish,
Accuse him of Class Warfare!
And remind him that you are the hero who educated him, loaned him money, and created his job.

When he and his family become sick from malnutrition and the toxins you dumped in the lake,
And he asks you for healthcare since he cannot afford it,
Tell him that if he were a righteous and hardworking person, he would be able to afford healthcare,
And that he is a moocher for asking someone richer than him to pay for it.

When he and his family die from their poverty, convince yourself that you are not responsible.
And when you die and reach the afterlife,
You will find that you no longer share a lake with the poor man.
He and his family will reside at Paradise Lake,
Where there is a fishing rod for everyone, and everyone gets to keep their fish,
While greedy fishing rod hoarders like you are never permitted there,
Because they couldn’t call it paradise if you were,
Since your greed would ruin it for everyone.

You will reside at a different lake.
It is called the Lake of Fire.
And the swimming there is unlimited.

How corporations are a system of stealing

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[The following excerpt is taken from the book, “Rescuing Religion from Republican Reason.”s”]


The Failings of Corporate Capitalism

In the two decades or so since the demise of the Soviet Union, many people have proclaimed that socialism and communism have been defeated and that capitalism has won. Well, this is true, and yet it isn’t. Pure socialism and communism (which were invented by those who suffered under pure capitalism) indeed lost the economic war. But they lost not to pure capitalism, but to a modified form of capitalism that we’ve practiced since the mid-1930s founded on the New Deal – the legislative incarnation of the Social Gospel. So, in a sense, pure capitalism was also defeated in America and in Western Europe many decades ago, not by communism and socialism, but by modified capitalism. It’s on this modified capitalist system that the western world’s prosperity in the post-WWII era has its foundation.

The working class peoples of the western world rejected pure capitalism. They voted to modify it and were, for many decades, delighted with the improvements. Of course, those who witnessed the change from pure to modified capitalism are no longer living, so today many of us take for granted the better life that modified capitalism has brought. To better appreciate our present system, it’s important to examine the flaws of pure corporate capitalism, the system that Republican Christians insist we return to.

Flaw #1 – Socialized Losses

As I stated earlier, the corporation is effectively a non-living person who bears the responsibility when things go bad, but who pays its owners profits when business is good. When things go awry, the great sacrificial act of the corporation is bankruptcy. When a corporation goes through Chapter 7 bankruptcy, its owners are forgiven their debts and the corporation bears the debt burden for them, kind of like Jesus does with our sins. But unlike Jesus, corporations are not human beings (nor are they the Son of God), so they cannot bear anyone’s debt burdens. Therefore, what happens in bankruptcy is that those to whom the business is indebted bear the debt burden, even though they did no wrong.

For example, if a life insurance company goes bankrupt in pure capitalism, its policy holders, who have been paying premiums for years, receive no benefit when they have claims (all states today have guaranty funds that pay policy holders up to a certain amount when their insurer becomes insolvent; but remember, this is “big government,” not pure capitalism where the government avoids involvement in the business world). Even though the policy holder entered into a contract with the insurance company and has upheld his end of the deal by paying premiums, the insurance company can break its contractual promise to pay his claims by going bankrupt and out of business. Without corporate liability protection from the government, the insurance company owners would have to sell personal property to pay claims to the policyholders. But thanks to corporate liability protection, the owners are relieved of responsibility for their risky business decisions; they get to keep all of the money the corporation has paid them (through dividends) when business was good, while their customers are left holding the bag, having paid out money for services they were promised but never received. To put it another way, a business owner can make millions of dollars when the risks he takes pay off, but when his risk-taking blows up in his face, and he owes millions of dollars, he gets to keep the millions he’s already been paid by the corporation, while society is stuck paying what he owes.

This is stealing.

Unlike a thief taking your purse, corporate owners steal your money ahead of time by over-paying themselves, while not leaving enough money in the corporations’ reserves to cover expenses when hard times arrive (which they inevitably will, sooner or later). In this manner, they steal from their creditors, customers, and suppliers through bankruptcy. In the case of creditors, they steal bank depositors’ money that was leant to them to grow the business. In the case of suppliers, they owe money for supplies received but not yet paid for. In the case of customers, they may owe services the customers already paid for, like car warranties. In every case, society bears the debt burdens that should be the business owners’ responsibility. In other words, the corporate model socializes losses when business goes bad, while privatizing gains when business is good.

Some may say that government bailouts, like those received by many banks, AIG, GM and Chrysler in 2008 and 2009 are also examples of socialized losses. Indeed they are. Many people make the mistake, however, of thinking that the owners of these companies would have been held responsible for their debts had the government not bailed them out. This assumption is incorrect. These companies would have filed Chapter 7 bankruptcy and gone out of business, and the owners and executives would have walked away with the millions they had already earned, while creditors, customers, and suppliers would have effectively paid their debts for them. Also, the financial system would have completely frozen, as it did in 1932, and millions more people would have lost their jobs than actually did. Everyone would have paid the price but those responsible for the failed companies.

The Bible, on the other hand, repeatedly calls for justice, as we discussed in the chapter on God’s Law. A definition of justice is “full liability.” As I’ve already stated in this chapter, if someone owed a debt in ancient Israel, they were fully responsible for paying it; if money was stolen, the thief had to pay it back and be punished. In fact, Exodus 22:7 says, “…the thief, if caught, must pay double.” However, under corporate “limited liability” protection, the thief gets to keep what he has stolen, and society is denied justice. Therefore, “limited liability protection” is the definition of injustice. And injustice is of Satan, not of God.

Not only is corporate liability protection injustice, but it’s the worst kind of injustice. Proverbs 22:16 says, “Oppressing the poor in order to enrich oneself, and giving to the rich, will lead only to loss [NRSV].” Corporate liability protection steals from society to “give to the rich” and encourages their irresponsibility; thus it violates this verse’s message. Republican Christians repeatedly label taxation of the wealthy to help the needy as “stealing”. However, with the Bible’s calls to seek justice for the needy, we have cause to believe that such “stealing” is permissible. But nowhere does the Bible indicate that it may be right to steal from society to enrich the wealthy.

So do we abolish the corporation for justice’s sake?

If we could go back in time and snuff out liability protection at its inception, it might not be such a bad idea. Our lives today might then resemble those of the Amish, and they seem reasonably happy with their agrarian, small trade lifestyle. However, from where we stand today, our socio-economic world is built on corporations. We rely on them for gasoline, the internet, telephones, airplanes, major appliances, and much more. The layout of our cities, infrastructure, agriculture, and so on, differs greatly from what it would had corporations never existed. Ending corporate liability protection would end corporations, collapse our economy, and destroy the society we know and depend upon. Millions, if not billions, of lives would be thrust into poverty in an economic crisis more severe than any the world has ever known. So I think we should stick with corporate capitalism.

What’s important here is acknowledging that corporate capitalism is not righteousness in and of itself. It is not a morality. It is not from God. It is not sacred. So when a Republican Christian calls you an evil socialist because you believe in “stealing” from the rich to help the poor, you can counter that he or she, being a corporate capitalist, believes in “stealing” from society to enrich the wealthy. So now that you’ve established that you both support “stealing,” you can abandon the “what’s right” argument and move on to a discussion about “what works” for the majority of the population. Of course, I’ve already covered “what works” in pure corporate capitalism. Now let’s take a look at what doesn’t work (i a later post).

The Immoralities of Corporate Capitalism – Part 1

 

[The following excerpt is taken from the book, “Rescuing Religion from Republican Reason.” It is the 1st of a 6-part series taken from the chapter entitled, “Pure Capitalism – How it Failed without Merciful Modifications”]

Opposite Evil: Socialism

Economics is complex. Throughout the history of civilization, nations would sometimes enjoy great prosperity. At other times, the very same nations would know nothing but want and suffering. Sometimes these crises resulted from war or famine, but in many cases, they simply happened without obvious causes. Economics is, in large part, the study of how these crises happen and of how to minimize their severity. Over the last two centuries, these complex problems have been addressed with three incredibly simple solutions: capitalism, socialism, and communism.

Capitalism promotes private ownership and private control of property, including businesses. Socialism, by dictionary and text book definition, is the public or government ownership of businesses (taxation is not the definition of socialism, contrary to what you may have been told). Communism is a communal ownership of all property, both business and personal, in which society shares all wealth equally.

Republican pundits and politicians tell us that pure capitalism is godly righteousness and that socialism is ungodly evil. They warn that any modifications to pure capitalism, such as taxation and business regulation, are socialist and therefore evil. By condemning any modifications to capitalism, Republican politicians and pundits condemn all economic solutions that don’t fit the simple-minded extreme of pure capitalism. (The pure capitalism of the late 1800s and 1900s was called “laissez-faire” capitalism. “Laissez-faire” is a French term, meaning “let it make.”) To Republicans, if this simple system can’t fix our problems, then there must be no fix, because all other solutions supposedly lead us closer to evil socialism.

The quote on how Satan attacks us with “pairs of opposite evils, so that we despise one so badly that we cling to the other,” applies to these Republican teachings every bit as much as it does to political party allegiances. History has shown that neither pure socialism, pure communism, nor pure capitalism have come close to solving humanity’s economic problems. This is why, unlike 50-100 years ago, nations have largely abandoned these systems. The Soviets and the Chinese ultimately abandoned pure communism and pure socialism, while Europe and the United States have abandoned pure capitalism. None of these systems worked, yet Republicans force us to choose between these simple-minded extremes and nothing else. They do this so we’ll despise the extreme of socialism so badly that we’ll cling to the extreme of pure capitalism, which favors the interests of the corporate power and wealth they represent.

Capitalism: What’s Good about It?

There are two major components to the version of capitalism we and much of the world practice: the free market and the corporation.

The free market has been around as long as people have conducted business transactions. It simply means that no laws interfere with the freedom to conduct business. No civilization practices it purely, as there are always some laws to prohibit unethical business conduct, but many have practiced it generally. Unlike government-planned economies (like socialism), the free market exists naturally. If a civilization has no system at all, it still has a free market.

The free market has great advantages over government-planned economies like communism. For example, a communist economy in which all people earn the same and share all property creates a disincentive to be productive. People in a communist economy know that working hard and working little have the same reward. Righteous people may work hard for the well-being of society, but selfish people will freeload as much as possible. In a free market economy, on the other hand, people can, to some extent, determine their earnings by how much and how effectively they work, and this increases economic productivity and innovation.

Socialist governments, unlike free market economies, bear the burden of having to control the allocation of resources. In other words, they must determine every price on every shelf and determine how much corn goes to one town and how much bread goes to another. The results are disastrous, because this task is far too large for any government to handle. What works better is letting supply and demand determine pricing and resource allocation. If a product fails to sell at one price, businesses lower the price to at least get some money for the product instead of taking a total loss. If a product sells out too soon, businesses raise the price in order to prevent a shortage and maximize revenues. Prices may vary from one neighborhood to another as supply and demand vary. These variations are best managed by many independent business managers than they are by one big government.

When socialist modifications are applied to capitalist economies, they sometimes fail. For example, if the government limits the price of tomatoes, because people say they’re too expensive, then farmers, who now earn less for each tomato grown, may stop growing them in favor of something more profitable, like asparagus. The result is a shortage of tomatoes. Now, instead of the people who most want tomatoes finding a way to pay high prices for them, nobody can buy tomatoes at all.

The free market is far superior to government-planned economies at providing products and services to the people who want them most. It also better aligns with the ways of God’s nation, ancient Israel, than a government-planned economy does. In fact, the free market is so biblical, even the Amish practice it! There is, however, a difference between Amish capitalism and the capitalism most of America practices. That difference is the corporation.

In capitalism without corporations, all companies are either sole proprietorships or partnerships. If a company falls on hard times and goes into debt, its owners are fully responsible for paying that debt, even if it means selling all of their personal property. In fact, in biblical times, if selling all property wasn’t enough, the owners would have to sell themselves and their children into slavery to pay debt. For example, Leviticus 25:39-40 says, “And if a countryman of yours becomes so poor with regard to you that he sells himself to you, you shall not subject him to a slave’s service. He shall be with you as a hired man, as if he were a sojourner with you, until the year of jubilee.” Exodus 22:3 says, “…A thief must certainly make restitution, but if he has nothing, he must be sold to pay for his theft [NIV].” And 2 Kings 4:1 tells us, “The wife of a man from the company of the prophets cried out to Elisha, ‘Your servant my husband is dead, and you know that he revered the Lord. But now his creditor is coming to take my two boys as his slaves.” Throughout history, the devastating consequences of debt kept companies small, since becoming part-owner meant your partners’ mistakes could cost you your freedom and possessions. Also, businesses took few risks with new products, services, or business practices, because the risks outweighed the rewards.

Corporate capitalism solved these debt problems. In corporate capitalism, the government provides liability protection for businesses that choose to become corporations. If a business’s owners run up large debts, they can declare bankruptcy, so that the corporation bears responsibility for the debts, while the owners are free to keep their personal possessions. The worst that can happen to a business owner in bankruptcy is that he or she loses money invested in the company. If the owner has 10 million dollars of property, but only invests one million in the business, the most the owner can lose is one million dollars, even if the business owes 10 million dollars. The corporation is effectively a non-living person who bears the responsibility when things go bad, but who pays its owners profits when business is good.

This system eliminates debt’s constraints on company size and risk-taking. Business owners are willing to take more risk and pursue profits more aggressively, thanks to the liability protection they receive when strategies fail. But even more important, corporations can raise money to become very large. While most people are afraid to invest in (and thus become part owner of) a business run by other people if doing so could cost them all they own, they are eager to invest in a promising company if the most they can lose is the money invested and nothing more. For them, there’s no limit to earnings, but there’s a strict limit to losses; they enjoy the benefits of ownership without the responsibility of ownership. Thus, a corporation can raise millions of dollars from many owners eager for gains and, in turn, grow far larger than any sole proprietorship or partnership ever could.

The benefits of large corporations are numerous. First, they can produce items en masse. A corporation that manufactures 1000 socks a day can produce them more cheaply than a one or two person operation can. They can buy supplies in bulk and can operate assembly lines in which many people and machines work simultaneously on different stages of the production process. Lower costs of supplying socks lead to lower sock prices for consumers. Second, corporations can produce products that no individual ever could, such as cars and jets, which make our lives more enjoyable, and washing machines, showers, and refrigerators, which have reduced the amount of time daily chores take from our lives. While socialist/communist countries, like the Soviet Union, also produced these products, they were far more expensive to produce than those of corporate capitalism, thanks to inefficiencies in the socialist/communist system.

[Next week – “The Failings of Corporate Capitalism”]

 

Trump’s bankruptcies prove why the wealthy should pay higher taxes

During Thursday’s Fox News Republican Presidential Candidate Debate, Chris Wallace asked Donald Trump about his most recent bankruptcy in which the banks to which Trump’s company was indebted lost over one billion dollars. Trump responded that the banks were evil in an attempt to convince us that the bankruptcy was no big deal. He may have been correct that the bankers were bad, but that’s missing the point.

We have to ask ourselves, “Where did the bankers get the billion dollars they lent to Trump’s company and then lost? Whose money was that?”

It was the depositors’ money.

It belonged to those who placed their money in the bank’s investment vehicles. These people expect to get their money back – with interest. And the banks have to make up for the money they lose in corporate bankruptcies by charging higher interest rates, more fees to their customers, and higher fees to businesses when they accept payments through corporate credit cards. So the money Trump failed to pay the banks was effectively stolen from the banks’ customers.

Corporate bankruptcy is legalized stealing!

In fact, a corporation is a system of legalized stealing!

Unlike sole proprietors and partnerships, who are held personally liable for their debts, corporate owners receive “liability protection” from the government. They get to make millions of dollars when business is good, but when their risk-taking goes awry, and they owe millions or billions of dollars that the company cannot afford to pay, they are personally free from having to pay any of it. The “company” goes bankrupt, but the owners of the company get to keep the profits they’ve been paid out during the years in which business was good. If it weren’t for corporate liability protection from the government, the owners might have to spend all they have in order to cover the debts, even if it makes them homeless and personally-bankrupt (which Trump made very clear in the debate that he has never been), and that would make corporate ownership financially dangerous and unattractive to the point that corporations and the stock market might not even exist.

It’s this “ownership without responsibility” that enables corporations to attract thousands of owners, which are commonly called “investors” or “shareholders,” and thus become so large that they can sell products nationwide or even worldwide, making their owners richer than was ever possible throughout all of human history. And these owners don’t have to put all of their eggs in one basket. They can own portions of many companies by owning stock.

So are you guilty of partaking in this system of stealing if you are financially well off but not a corporate owner?

Most likely, yes!

If you own stock to any degree, you are a corporate owner who benefits from liability protection. (You wouldn’t risk investing in stock if you might have to pay more than you invested because the company accumulated debts it couldn’t pay.) Yes, the shares you own might be very small in comparison to wealthier shareholders. And even if you don’t own stock but get a hefty paycheck from a corporation (ballplayers being the most extreme example of this), you still benefit from this system of stealing. No matter how you slice it, if you’re rich, you got rich because you took advantage of a legalized system of stealing.

So how can we justify having a liability protection system that steals from society to enrich the wealthy?

The only way I think it could possibly be justified in God’s eyes is if we require those who get wealthy from this system (which is just about all wealthy people) to pay a higher percentage of their income to taxes, and for those taxes to serve the common good and better the lives of those crushed and left out by the system. In fact, if we don’t insist on balancing out the system in this manner, we are evil, because we will effectively endorse a system in which the wealthy force the debts on society without allowing society to share in the gains. That’s the opposite of the Bible in which God required a national, mandatory redistribution of wealth from the haves to the have-nots, but had no system that enabled the wealthy to legally steal from society.

Some might say we should abolish corporate liability protection, but then world as we know it would collapse. You wouldn’t even be able to get gasoline without corporations. To live in the modern world, we need them. Therefore, I don’t have a problem with a system that makes society share in the debts caused by the risks that wealthy investors take, as long as society is entitled to share in the gains that wealthy investors make.

7 Bible Quotes of Social Justice as a Purpose of God’s Law

breaker boys

[This article is an excerpt from the book, “Rescuing Religion from Republican Reason”]

Republicans and Evangelicals have found common ground in their opposition to social justice. Naturally, justice for the poor flies in the face of what the Republicans have been doing since the 1870s – representing the wealthy oppressors of the poor. The evangelical church, however, tends to oppose social justice for a different reason: Many churches, especially mainline denominations, have had a tendency throughout the 1900s to emphasize social justice while ignoring the importance of personal salvation and relationship with God through Jesus Christ. In other words, they embraced the great commandment of “love your neighbor as yourself” but ignored the great commandment of “love the Lord your God with all your heart, with all your soul, and with all your mind.” So the evangelicals countered this error by embracing the “love the Lord your God” commandment while despising the “love your neighbor” commandment, at least in terms of social justice. Today, many Bible-believing evangelical churches teach little more than, “You’re saved! Now praise the Lord for it, and get others to join the club!” This fits perfectly with the Republican Party’s agenda. The last thing they want is for the Christian voters they depend upon to second guess Republican support for the wealthy at the expense of the lower class.

Salvation, praise and evangelism are all cornerstones of the Christian faith. But they are not the only ones. If they were, the Bible would be a much smaller book. Common sense tells us we can love God and our neighbors, on both personal and social levels, simultaneously. The Bible never gives the slightest indication that choosing one over the other is ever an option. Thanks to Republican evangelicals burying social justice, I feel a need to resurrect the Bible’s social justice commands. Here are several:

Isaiah 1:17, “…learn to do good, seek justice, rescue the oppressed, defend the orphan, plead for the widow [NRSV].”

This is not a call to simply hand money or food to the needy. Doing so is not justice; it’s assistance. The Bible calls us to this as well, but assistance does not replace justice; it compliments it. We are to rescue the oppressed from the harm of those who oppress them.

How do we do that?

Do we kidnap them from their workplaces and set them free in the woods?

No.

This verse commands us to plead their cases, to defend their causes. Only politically-oriented action will accomplish this. Similar to the word justice is the word judicial. The judicial system enforces the law, which is established by legislatures, which consist of legislators who, in a democracy, are chosen by voters. This passage calls God’s people to political action.

Isaiah 10:1-2, “Woe to those who make unjust laws, to those who issue oppressive decrees, to deprive the poor of their rights and withhold justice from the oppressed of my people, making widows their prey and robbing the fatherless [NIV].”

What does it mean to enact unjust laws and oppressive decrees? It’s rare that a law literally commands people to oppress the poor. Rather, oppressive laws give power to oppressors and give their “prey” little or no recourse. We’ll examine some unjust and oppressive laws in the Liberty and Small Government chapters.

Isaiah 58:3…6, “‘Why do we fast, but you do not see? Why humble ourselves, but you do not notice?’ Look, you serve your own interest on your fast day, and oppress all your workers…Is this not the fast which I choose; to loose the bonds of injustice, to undo the thongs of the yoke, and to let the oppressed go free, and to break every yoke?’ [NRSV]”

God ignores our worship of Him when we do the opposite of His will. If we commit and permit injustice against the poor, then our hate, hurt, and neglect of God’s children hurts God more than our praise pleases Him.

Jeremiah 5:28-29, “They have grown fat and sleek. They know no limits in deeds of wickedness; they do not judge with justice the cause of the orphan, to make it prosper, and they do not defend the rights of the needy. Shall I not punish them for these things…? [NRSV]”

Again, here God requires that His followers who have political power or input “Defend the rights” of the needy – yet another call for political action, because rights can only be defended by the strong arm of the law.

Notice that God wants those in power to “make” the orphans prosper. He denies the wealthy the right to do whatever they want with their money and power. When they assume such a right, God’s punishment follows.

When we seek, establish, and uphold a system of justice for the lower income people of the working class, they actually prosper; they don’t fall into poverty. This is what the Bible calls us to. Unfortunately, many Republican Christians think God wants us to let these people plummet to rock bottom, and only then, after they’ve lost it all, are we to assist them with handouts. This is cruel. God, on the other hand, is gracious; and He desires that none of us lose it all and then have to rely on the whims of the wealthy to meet our needs.

Proverbs 31:8-9, “Speak out for those who cannot speak, for the rights of all the destitute. Speak out, judge righteously; defend the rights of the poor and needy [NRSV].”

Again, this is not about handouts; it’s about speaking up for the poor. In any non-democratic government, the poor had no means of representing themselves. In America today, they do. But if we vote for politicians who oppose the well-being of the poor, their cries are rendered ineffective.

Proverbs 29:7, “The righteous care about justice for the poor, but the wicked have no such concern [NIV].”

This is a strong statement. If you have no concern for protecting the powerless from the powerful by political means, the Bible says you’re “wicked!”

Jeremiah 22:15-16, “’Do you become a king because you are competing in cedar? Did not your father eat and drink, and do justice and righteousness? Then it was well with him. He pled the cause of the afflicted and the needy; then it was well. Is that not what it means to know Me?’ declares the Lord.”

Many Republican Christians today disagree with the last line of this passage. They do not believe that pleading the cause of the afflicted and needy has anything to do with knowing God (many of them would condemn pleading the cause of the afflicted and needy as “class warfare”). To them, knowing God is just about praying, singing songs, praising His name, and avoiding such personal behaviors as drinking, smoking, swearing, etc. The focus of their entire faith is on God and their own rule-following, but rarely on the well-being of others.

To the contrary, this passage tells us that if we don’t plead for the well-being of the needy and the afflicted, and seek justice on their behalf, then we really don’t know God. In this case, the god we praise is just a figment of our imaginations – an extension of our own selfishness that we claim to be the God of the Bible, but that better represents His adversary.

14 Bible verses proving that God’s laws are for the well-being of others

What does the purpose of God’s laws have to do with politics?

Well, politicians, especially of the Republican variety, often have principles that they say are more important than the well-being of people. For example, if we promote a healthcare solution, they argue that, even if it works, it’s evil, because it doesn’t preserve the higher principles of small government, or liberty, or pure capitalism. As the self-proclaimed “Christian Party”, the Republicans should align their morality with the Bible, if they do not want to be hypocrites. So let’s see if the Bible is more concerned with these man-made principles, or whether God’s laws are about the well-being of people.

(By the way, in looking at the purpose of God’s laws, I am in no way saying that our nation, which has guaranteed its people religious freedom from the beginning, should make its laws according to the Bible. I’m simply saying that if the Republicans are going to oppose solutions in the name of “that’s not right,” and they claim their morality comes from Christianity, then their ideologies must be biblically supported. That’s why I wrote the book, “Rescuing Religion from Republican Reason.” It tackles their false moral arguments in depth using the Bible, economics, and history)

Fortunately, determining the purpose of God’s laws is easy, because in some cases, God even includes the reasons for the Old Testament laws in the passages in which they are given. Here are some of those passages (the reasons for the laws are in italics):

Exodus 22:21-24, “You shall not wrong a stranger or oppress him, for you were strangers in the land of Egypt. You shall not afflict any widow or orphan. If you afflict him at all, and he does cry out to Me, I will surely hear his cry; and My anger will be kindled, and I will kill you with the sword; and your wives shall become widows and your children fatherless.”

Exodus 22:26-27, “If you ever take your neighbor’s cloak as a pledge, you are to return it to him before the sun sets, for that is his only covering; it is his cloak for his body. What else shall he sleep in? And it shall come about that when he cries out to Me, I will hear him, for I am gracious.”

Exodus 23:8, “And you shall not take a bribe, for a bribe blinds the clear-sighted, and subverts the cause of the just.

Leviticus 19:16, “Do not do anything that endangers your neighbor’s life.”

Deuteronomy 5:14, “…but the seventh day is a Sabbath of the Lord your God; in it you shall not do any work, you or your son or your daughter or your male servant or your female servant or your ox or your donkey or any of your cattle or your sojourner who stays with you, so that your male servant and your female servant may rest as well as you.”

Deuteronomy 6:24, “So the Lord commanded us to observe all these statutes, to fear the Lord our God for our good always and for our survival, as it is today.”

Deuteronomy 14:28-29, “Every third year you shall bring out the full tithe of your produce for that year, and store it within your towns; the Levites, because they have no allotment or inheritance with you, as well as the resident aliens, the orphans, and the widows in your towns, may come and eat their fill so that the word of God may bless you in all the work that you undertake [NRSV].”

Deuteronomy 20:5-7, “The officers shall also speak to the people, saying, ‘Who is the man who has built a new house and has not dedicated it? Let him depart and return to his house, lest he die in the battle and another man dedicate it. And who is the man that has planted a vineyard and has not begun to use his fruit? Let him depart and return to his house, lest he die in the battle and another man begin to use its fruit. And who is the man who is engaged to a woman and has not married her? Let him depart and return to his house, lest he die in the battle and another man marry her.”

Deuteronomy 22:8, “When you build a new house, you shall make a parapet for your roof, that you may not bring bloodguilt on your house if anyone falls from it.”

Deuteronomy 24:5, “When a man takes a new wife, he shall not go out with the army, nor be charged with any duty; he shall be free at home one year and shall give happiness to his wife whom he has taken.”

Deuteronomy 24:6, “Do not take a pair of millstones – not even the upper one – as security for a debt, because that would be taking a man’s livelihood as security [NIV].”

Deuteronomy 24:14-15, “You shall not oppress a hired servant who is poor and needy, whether he is one of your countrymen or one of your aliens who is in your land in your towns. You shall give him his wages on his day before the sun sets, for he is poor and sets his heart on it [“livelihood depends on it” in the NIV]; so that he may not cry against you to the Lord and it become sin in you.” [notice that God doesn’t blame the poor for class warfare here; he blames those responsible for the poor man’s condition.]

Deuteronomy 24:21, “When you gather the grapes of your vineyard, you shall not go over it again; it shall be for the alien, for the orphan, and for the widow.”

Deuteronomy 26:12, “When you have finished paying all the tithe of your increase in the third year, the year of tithing, then you shall give it to the Levite, to the stranger, to the orphan and to the widow, that they may eat in your towns and be satisfied.”

The overwhelming other-centered nature of God’s Law is a great testament to who He is and what He is about. His Law is selfless, because He is selfless. He always places our interests ahead of His, just as He did when he sent Christ to save us from the consequences of our sins.

If anyone is to say that they oppose a political policy because it is evil in God’s eyes, then they must show that it hurts people more than it helps people, because God’s law is concerned with helping people. Any man-made ideology that gets in the way of the well-being of the needy is an evil ideology.

Republican Tax Lie #4: “Reducing investment taxes is beneficial”

[The following excerpt is from my book, “Rescuing Religion from Republican Reason.”]

Capital Gains Taxes

I’ve heard some Christian Republicans say it’s morally wrong to tax capital gains, as if it doesn’t count as income. This is nonsense. Let’s say you buy a restaurant for a million dollars. You own it for five years and make nice profits from your customers. Then you sell the restaurant for 2 million dollars. So, in addition to your operational profits, you get a bonus of 1 million dollars when you sell the place. Why should that money not be taxed?

Some will say the Bible has no capital gains tax, so neither should we. In the Bible, however, all Israelite males inherited land; they never paid for it. And most land sales were made to pay off debts, not to get rich. And then, every fifty years, in the Year of Jubilee, lands had to be given back to their original owners or their descendants, so all land deals were temporary, not permanent. It’s quite a different set up from what we have today. Also, the Israelites had no stock market, which, as I stated before, is founded on liability protection for the shareholder. The fact that you receive liability protection when you buy stock is all the more reason why you should pay taxes on your gains.

Those who argue against capital gains cuts plead the cause of the rich, not the needy. They’ll say almost everyone benefits from a capital gains cut, because a lot of lower income people have a 401k that invests in stocks. This is true to a small extent, but 96% of capital gains are realized by people earning over $100,000 per year and 67% from those earning over $1,000,000. Capital gains tax cuts clearly favor the rich.

Republicans proclaim that capital gains cuts make the stock market boom, and that’s good for everyone. Indeed, it makes investors richer, but it’s less beneficial to low income non-investors. What they fail to proclaim is that economic crashes, which hurt the working class, follow soon after. Three of the four biggest stock market meltdowns of the past century were preceded by large capital gains tax cuts within 5 years prior. After most WWI debts had been paid, the Harding and Coolidge administrations gradually lowered taxes (capital gains were taxed the same as income back then) from a top marginal rate of 73% in 1921 to 25% in 1925. For 5 years, the Dow soared from a value of 100 in 1924 to 380 in 1929, but then came the massive crash that ushered in the Great Depression. In 1997, the capital gains rate was cut from 28% to 20% to encourage investing, even though the Dow had already grown from 4000 in January of 1994 to 6000 in January of 1996. Three years after the cut, the market crashed again in what some call the Dot-Com Bust. In 2003, capital gains were cut to 15% to help the market rebound, but 5 years later, the market crashed again, losing half its value. One might argue that this crash was due to the housing bubble, but let’s not forget that tax savings from the Bush tax cuts were often invested in real estate, where capital gains rates also apply, because people were afraid to invest in stocks after the Dot-Com Crash. Crashes like these will continue as long as there’s insufficient consumer spending money to buy the products that stock investments create.

Lower tax rates are a horrible reason to invest in stocks. What happens after a capital gains tax cut is that people rush to invest without caution, because they anticipate the market will boom due to the lower tax rate. So many people think this will happen that it actually does. In fact, Republicans love to point out how capital gains tax revenues increased even though the rate decreased. But this is only temporary. Eventually, the stocks become overvalued, and the prices plummet, causing a panic and crashing the market and the economy along with it. A smart investor invests in a company’s stock because he expects the company to become profitable, and he wants to become part-owner of it (which is what happens when you buy stock), so he can share in the profits (dividends). That’s the only legitimate reason to invest in stocks.

Unfortunately, every time a Republican gets elected president, his first order of business is to lower taxes in the name of boosting the economy. If he doesn’t cut spending to match, the economy will heat up, maybe even become too hot, but then it will return to recession as it has at least once in every decade in U.S. history. When it does, the tax rates are so low that the government can’t come close to paying its bills, and the nation’s debt skyrockets. All that’s accomplished in the end is an increase in the gap between the rich and the working class, which I believe is the ultimate goal of the Republicans and the wealthy people they represent. Tax cuts should not be used to manipulate the short term economy, just so a new president can get re-elected in 4 years. They should be set at a rate that’s fair and can pay the nation’s bills and be left at that rate.

Perhaps the discussion should not be whether tax revenues increase every time we cut capital gains tax rates. Perhaps, instead, we should examine which capital gains tax rate is most effective over the long haul at maximizing revenue, and then stick with that rate. Let’s compare the 20% rate instated in May 1997 to the 15% rate of May 2003 (these numbers come from the most recent capital gains study at the Treasury Department website that goes through 2009). And let’s compare the amount of capital gains realized (not taxes paid, but gains reported) under each rate as a percentage of GDP (GDP comparisons allows us to factor out inflation that would make more recent numbers larger than older ones). What we find is that the average capital gains realizations as a percentage of GDP from 1998-2002, under the 20% rate, were 4.28% per year. Under the 15% rate from 2004-2009, the realizations were also, amazingly, 4.28% per year. (Both periods, by the way, started with a stock market boom and ended with a bust, so we’re comparing similar situations.) In other words, the 15% tax rate did not produce the slightest bit higher capital gains realizations than did the 20% tax rate. All it did was tax the gains at a lower rate and decrease tax revenue. The 20% rate provides investors with all of the tax incentives they need to encourage investing, and lower rates add no further incentives. So it appears that rates below 20% do nothing to increase capital gains realizations, and rates over 20% (such as the 28% rate from 1987-1997) hurt realizations. Thus, 20% is the optimal capital gains rate. So let’s stick with it!

The Tea Party Religion

So, again, the Republican claim that tax cuts always pay for themselves is untrue. So are the claims that taxes hurt the economy, that Democrats spend more than Republicans, that low tax countries fare best, and that income taxes are evil. These deceptions, along with all Tea Party anti-tax rhetoric, are rooted in a single motive – the love of money. As Ecclesiastes 5:10-11 says, “He who loves money will not be satisfied with money, nor he who loves abundance with its income. This too is vanity. When good things increase, those who consume them increase; so what is the advantage to their owners except to look on (‘see them with his eyes’ in the NRSV)?”

Human nature hasn’t changed one bit since Old Testament times. Worshipers of wealth still can’t get enough. And today, they run a 24 hour-a-day propaganda campaign to get voters to favor their greed over others’ needs. The new religion they’ve established is called the Tea Party. At its heart is loving money so much that paying taxes makes your blood boil, especially when you suspect that your tax money will go to someone you think is less worthy than yourself. If this describes you, then you love money more than God. And Jesus made it clear that you can’t serve both God and money. You’ll love one master and hate the other.

I understand it stings a little to see a significant chunk of your pay taken from your paycheck. The next time you have that feeling, just remember that the rest of us pay taxes, too. And those who don’t are usually not in enviable positions. If we all stopped paying taxes tomorrow, we’d all have more money to bid on houses and cars, which would simply drive up prices. More money wouldn’t create more goods, houses, or land. It would just mean that we all pay more for them. (Of course, on the back end, everyone who works for the government or companies that are contracted by the government would lose their jobs, and entitlements would go away, taking money back out of the economy and crashing it.) If you make enough money to pay one of the higher tax rates, your life is pretty good, at least financially speaking. You have far more comfort, enjoyment, and good food than anyone in the Bible ever did. Appreciate what you have, thank God for it, and focus your energies on the well-being of others rather than on your efforts to hoard wealth.

Republican Tax Lie #3: “Democrats spend more.”

President-elect Obama with Nancy Killefer, the new Chief Performance Officer, for his administration. The news conference held at the transition office in Washington, D.C. on Jan. 7, 2009. President-elect Obama with former Presidents Bush (41), Carter and Clinton and current President Bush at the WHite House on Jan. 7, 2009. (Photo by Pete Souza)

President-elect Obama with Nancy Killefer, the new Chief Performance Officer, for his administration. The news conference held at the transition office in Washington, D.C. on Jan. 7, 2009.
President-elect Obama with former Presidents Bush (41), Carter and Clinton and current President Bush at the WHite House on Jan. 7, 2009.
(Photo by Pete Souza)

[The following excerpt is  from my book, “Rescuing Religion from Republican Reason.”]

(I’ll admit that this is more of a budget lie than a tax lie, but it’s what follows next in the taxation chapter of the book, so I included it here.)

The Republicans love to accuse Democrats of engaging in out-of-control spending. In the case of Barack Obama, they’ve said he spends more per year than any president in history. What they fail to tell us is that this is true for every president, because inflation and population growth drive up spending numbers over time, even without changes in fiscal policy. To make a more accurate assessment of who the big spenders have been, I think it’s best to determine who increased spending the most from year to year. So I’ve gathered total federal spending numbers from the historical tables of the White House budget (which you can find at whitehouse.gov) (these numbers can also be found at the Congressional Budget Office website.), and then I calculated how much each year’s spending increased from the previous year. I then averaged the increases by president to see who increased spending the most.

Spending and Annual Increase % by President
Federal Outlays (billions) / % Increase from Previous Year
1981    678.2            Carter
1982    745.7           Reagan        9.95%
1983    808.4          Reagan        8.41%
1984    851.8           Reagan        5.37%
1985    946.3          Reagan        11.09%
1986    990.4          Reagan        4.66%
1987    1,004.0       Reagan        1.37%
1988    1,064.4      Reagan        6.02%
1989    1,143.7       Reagan        7.45%
1990    1,253.0       Bush41        9.56%
1991    1,324.2       Bush41        5.68%
1992    1,381.5       Bush41        4.32%
1993    1,409.4      Bush41        2.02%
1994    1,461.8       Clinton        3.72%
1995    1,515.7        Clinton         3.69%
1996    1,560.5       Clinton         2.96%
1997    1,601.1        Clinton         2.60%
1998    1,652.5       Clinton        3.21%
1999    1,701.8       Clinton         2.98%
2000    1,789.0     Clinton         5.12%
2001    1,862.8      Clinton        4.12%
2002    2,010.9     Bush43       7.95%
2003    2,159.9      Bush43       7.41%
2004    2,292.8    Bush43       6.15%
2005    2,472.0     Bush43       7.81%
2006    2,655.1     Bush43       7.40%
2007    2,728.7     Bush43       2.77%
2008    2,982.5    Bush43       9.30%
2009    3,517.7     Bush43       11.40%
2010    3,456.2    Obama        10.4%
2011     3,603.1    Obama        -1.54%
2012    3,796.0    Obama       5.36%
2013    3,803.0    Obama       0.18%

[Note: 203 billion dollars of Obama stimulus from fiscal year 2009 was subtracted from Bush 43’s 2009 total and added to Obama’s 2010 total when increase percentages were calculated.]

Average Annual % Increase by President

Reagan      6.79%

Bush 41     5.40%

Clinton      3.55%

Bush 43     7.52%

Obama      3.60%

 

Unlike in the 1970s, inflation levels have been low throughout this period, so they have little effect on the numbers. Ronald Reagan endured an average inflation rate about 1% higher than the other presidents did, so we could knock a point off and lower his increase rate to 5.79% to be fair. Nonetheless, the Republicans prove to have been far bigger spending escalators than the Democrats over the past three decades. Meanwhile, Clinton and Obama have been the most frugal of all modern presidents, increasing spending at rates barely above the inflation rate. Some might argue that Reagan couldn’t cut welfare spending because he had a Democratic Congress and that Clinton may have been restrained by a Republican Congress his last six years. So let’s look at the budget years in which a single party controlled all of Congress and the presidency:

Republicans 2002-2007: 6.58% average spending increase per year.
Democrats 1994-1995, 2010-2011: 4.07% average spending increase per year (This number includes 203 billion dollars of Democrat-approved stimulus money spent during fiscal year 2009.)

Even when they have had total control, Republicans have increased spending at a rate 50% greater than that of the Democrats. And if it weren’t for the economic stimulus needed to fix the free-falling economy when Obama took office, the percentage rate for the Democrats likely would have been lower. If you’ve been voting Republican because you hate government spending, you’ve been taken for a fool.

Tea Party libertarians might argue that it was old guard Republicans who were out-of-control spenders, but if the Tea Party takes over, they will slash spending, and we’ll all be better off. Having worked in the corporate world, I know what happens when budget-slashing executives take control of a company. They mindlessly cut departments’ budgets to the point where they cannot function. The company then loses customers due to poor customer service, lack of product development, and insufficient advertising. Similar catastrophes happen when the government gets slash-happy. If they slash funding for child support collections (my sister worked in this field at a time of budget cuts, so this is her experience), then fathers get away with failing to pay support for their children. Then the women who lose their child support have to go on welfare, costing tax-payers far more than if the budget cuts had never been made. Also, this budget slashing keeps the government from enforcing the law, encouraging more people to do evil. This reality applies to the business world, too. Tea Party libertarian, Ron Paul, proposed to make 40% cuts to regulatory agencies like the FDA and the EPA in his 2012 budget proposal. Should such a proposal ever succeed, it will give license to big businesses to poison our food and our environment. I’m all for making government more efficient and cost effective, and so are many Democrats and Republicans, but the mindless budget slashing of the Tea Party will only lead to disaster.

Republican Tax Lie: “Tax cuts don’t add to the debt”

Deficits_vs._Debt_Increases_-_2008

[The following excerpt is from my book, “Rescuing Religion from Republican Reason.”]

 

Do Tax Cuts Always Pay for Themselves?
One of the great deceptions promoted by Republican Christians is that tax cuts always pay for themselves. So anytime Republicans propose a tax cut (which is all of the time, regardless of whether we have a good or bad economy, a budget deficit or surplus), they insist it will help the economy without adding to the nation’s debt. They tell us the economic growth from the tax cuts will be so great that it will more than compensate for the decrease in the percentage of incomes taxed. And the way Republicans do this is by cherry-picking the numbers and quoting numbers without making proper comparisons. To give you an example of the latter, a popular internet meme has been that Reagan cut taxes from a top rate of 70% to 28% (although they fail to mention that he increased the capital gains tax rate to 28%, compared to the 20% rate we have now, and he increased rates for lower income workers) and, as a result of that cut, total income tax revenues increased from $360 billion in 1980 to 660 billion in 1990, so this proves that taxes actually increased after the Reagan tax cut. This is true, as you can see from the following print screen from Table 6 of the IRS Data Book, which you can find at www.irs.gov (The first screen shot is of the header, so you can see how the columns are labeled):

 

IRS header

IRS 80s
However, if we look at the years following the Reagan 1981 tax cut, you’ll see that total income tax (column 2) went from 406 billion in 1981, to 418 billion in 1982, to 411 billion in 1983, so if you adjust for inflation, which was around 5% at the time, it was actually a slight loss for a few years. Only if you look at the whole decade can you say that the tax revenues really went up. But the fact is that the normal rate of annual tax revenue growth that always comes from annual inflation growth, population growth, and production growth was halted for a few years by the Reagan tax cuts, which put us behind the 8-ball and contributed greatly to the 189% increase in the national debt (the worst of any president in history) that Reagan oversaw during his 8 budget years.

The bigger question here, however, is, “How do these numbers compare?”
So here are the 1960s, 70s, and 90s numbers:

IRS 60s IRS 70s

IRS 90s
In the 1960s, income tax revenues increased from 67 billion to 139 billion (a 107% increase);
In the 1970s, income tax revenues increased from 139 billion to 360 billion (a 158% increase);
In the 1980s, income tax revenues increased from 360 billion to 650 billion (a 80% increase);
In the 1990s, income tax revenues increased from 650 billion to 1,372 billion (a 111% increase).
So we see that the 1980s had the lowest tax revenue growth of the four decades; therefore, when it comes to paying our bills, Reagan’s tax cuts proved to be the worst revenue solution for our country during those decades, and quite likely the worst of the century.

Of course, the worst of the worst was yet to come, thanks to the 2001-2003 Bush tax cuts which dropped the capital gains rate all the way down to 15%. Here are the 2000s:

IRS 00s

In the 2000s, income tax revenues increased from 1372 billion to 1453 billion (a 6% increase). If you factor out inflation and population growth, the tax cuts resulted in a massive loss in annual revenues by the end of the decade.

The right-wing Christian book, “Politics According to the Bible”, by Wayne Grudem, dares to use the Bush tax cuts to make the same claim that tax revenues always increase after a tax cut. What he does is cherry-pick the year 2005, the first year tax revenues returned to a point above where they were before the tax cuts were enacted in 2001, and only cites the 16% revenue growth rate from that year as proof the tax cuts increase revenue. He hides from his readers the fact that total income tax revenues fell from 1.365 trillion in 2001 to 1.249 trillion in 2002, and fell further to 1.181 trillion in 2003, and then rose back up to 1.221 trillion in 2004, and finally 1.415 trillion in 2005. If you look at the years leading up to the cuts, on the other hand, you’ll see that income tax revenues increased from 717 billion in 1993, the year of the Clinton tax increases, to 1.365 trillion in 2001. That’s revenue growth of 81 billion per year that mostly came from GDP growth (as well as inflation and population growth, as always), all despite the fact the Clinton raised taxes on the rich, which Republicans had predicted would be economic Armageddon. The Bush tax cuts reversed this growth and undermined our nation’s ability to pay its bills. According to an analysis by the Congressional Budget Office, the Bush tax cuts cost the U.S. 2.8 trillion dollars in tax revenue from 2002 to 2011, a loss of 280 billion dollars per year. Yes, conservatives might argue that revenues did increase for a few years before the 2008-2009 recession began, a recession caused by a housing bubble that was largely fueled by the wealthy dumping their Bush tax cut savings into real estate investing (which was attractive at the time due to low interest rates), but then revenues stagnated again. So while the Reagan tax cuts may have resulted in an 80% increase in annual income tax revenues from 1980-1990, the Bush tax cuts only resulted in a 6% increase in annual income tax revenue from 2000 (1372 billion) to 2010 (1454 billion). That might be the worst decade of tax revenue growth of all time.

All of this isn’t to say that tax cuts have never paid for themselves. The Kennedy/Johnson tax cuts of 1964 did increase revenue as a result of improving the economy. But let’s not forget that these cuts lowered the top marginal income tax rate from 91% (Wow!) to 70% (still “Wow!” – by today’s standards) and the corporate tax rate from 55% to 47%. The rates of 70% and 47% still collected such a large percentage of growing incomes that tax revenues increased. But when Reagan lowered the top rate to 50% in 1981 (and to 28% in 1986, while raising capital gains), the results weren’t as good. It was just short of a break-even for the budget. Then the Bush tax cuts lowered the top rate to 35% (and capital gains to 15%), which delivered a serious blow to the budget. And it can get worse going forward. The budget proposed by 2012 vice presidential nominee and Republican Congressional Budget Director Paul Ryan called for a 25% top marginal income tax rate and for 0% capital gains, dividends, interest, and corporate tax rates. Zero times any amount of growth is zero dollars of tax revenue! The Ryan plan would have been the fast track to debt doomsday – a day when no one will lend the government money out of concern over their ability to pay it back. At that point, the government will have to print money to pay its debts, like Mexico did in the 1980s (which resulted in 4 straight years of over 100% inflation per year). We can avoid such a fate by establishing tax rates that pay our bills as we did in the 1990s. Some would say to cut spending instead, but both parties have proven that, given total control, they can’t limit spending enough for our current tax rates to pay for it.

Today’s Republican approach to tax cuts is all out idiocy. The idea that cutting tax rates lower and lower will always increase revenue is a lie. Any sensible person should realize that there is a threshold below which lower tax rates will hurt tax revenues. If you drop the rates too low, the debt grows. Reagan proved that a little. Bush proved it a lot. And judging from the rhetoric of Republican candidates like Ted Cruz, Mike Huckabee, and Rand Paul, the Republicans are prepared to cut rates even lower to a point from which we will never recover in our lifetimes.

Oh, and one more thing…Republicans also like to say that increasing income tax rates will damage the economy so badly that tax revenues will fall. For example, Mike Huckabee said in his book, “A Simple Government,” published in 2011, “‘Arthur Laffer…the father of Supply Side economics…anticipates that the rise in taxes from the expiration of the Bush tax cuts [in 2012]…will cause a “crash in tax receipts,”…causing even higher deficits and unemployment.” Well, Obama went ahead and let the Bush tax cuts for the wealthy expire at the end of 2012. So did tax receipts “crash” in 2013 and 2014?

See for yourself:

IRS 10s

 

Isn’t comprehensive economic data a bugger if you’re a hardcore Republican?
It’s like kryptonite, isn’t it?

 

 

 

Republican Tax Lie: “Low tax countries fare best”

OECD taxes

[The following excerpt is from my book, “Rescuing Religion from Republican Reason.”]
Do Taxes Hurt the Economy?

Should you have an opportunity to counter conservative arguments with what I’ve shared thus far, it’s likely that, at some point in the conversation, your opponent will abandon the “what’s right” argument and switch to the “what works” argument. In doing so, they’ll argue that taxes are bad for the economy, and the lower the taxes, the better off we all are.

Before we get into theory about how economics works, let’s look at some international numbers comparing economic growth and tax rates for long-time capitalist countries:

 

 

Avg. Annual Real GDP Growth & Taxes as a % of GDP, 1979-2010

Country       Growth         Tax/GDP
Ireland              3.2%                  28.4%
Norway             2.0%                  40.8%
Finland             2.0%                  35.6%
Spain                 1.9%                   22.0%
Japan                1.9%                   24.3%
U.K.                   1.8%                   31.9%
Australia           1.8%                  25.0%
Netherlands    1.7%                  42.6%
Austria              1.7%                   38.4%
Sweden             1.7%                   46.7%
Belgium            1.6%                   43.0%
U.S.                    1.6%                    26.0%
Canada             1.4%                    38.7%
Denmark         1.4%                     42.1%
[Source: OECD/Bureau of Labor Statistics via “The Benefit and the Burden” by Bruce Bartlett]

 

 

Of the large, well established economies in the world, ten of them have had GDP growth greater than the United States in the years since we embraced the anti-tax ideology of the Reagan Revolution. Of those ten, seven have had higher taxes than us, some of them much higher. Two of the three countries with lower tax rates than the United States have serious debt problems. On the other hand, none of the countries taxing above 30% have serious debt problems, except Belgium. More remarkable is the fact that every country on this list, except Spain, had a lower unemployment rate than the U.S. as of 2011, and all of them have a longer life expectancy for their people. No need to despair, however, the U.S. does lead this group in one category: We have richer rich people than anyone in the world!

Tea Party conservatives love to talk economic theory, but they hate comprehensive international comparisons like this one, because they indicate that other countries are doing better than the U.S., despite not practicing Republican every-man/woman/child-for-itself policy. For 30 years after WWII, America had a huge advantage over European nations that had been reduced to rubble by the war and needed American manufacturing to rebuild. That lack of competition gave us the illusion that our system was the best. Once Europe got back on its feet, however, they proved our way is not the only way.

Why would countries with greater wealth redistribution than the U.S. have greater economic growth?

It’s because disparity undermines prosperity.

Imagine an economy in which 80% of households can afford to buy a car. We’ll call this the low-disparity economy. Now imagine a high-disparity economy where only 20% of the households can afford a car, but 1% are extraordinarily wealthy. Will the superrich buy enough cars to make up for the rest of the population? They may buy more than they need, but not enough to make up for everyone who can’t afford a car. Even if they buy extra cars, will they drive them enough to keep as many mechanics busy as the low-disparity economy will? Not even close! The low-disparity economy will employ 4 times as many mechanics as the high-disparity economy will, because, in the low disparity economy, cars will be driven 4 times as much. The same goes for carpet cleaning. Since it only makes sense to clean carpets every so often, the superrich will not spend so much of their wealth on carpet cleaning that they compensate for the 80% of citizens who can’t afford it in a high-disparity economy. As disparity of wealth increases in an economy, fewer customers means fewer jobs needed to serve those customers, which means fewer opportunities for business owners. Without customers, businesses go bust. The healthiest economy is one that strikes a balance between investment money and the consumer spending money that makes those investments to pay off.

One of the most deceptive claims from the Republican gospel is that tax cuts for the wealthy are the best medicine for an economy; if we give the wealthy more money through tax savings, they have no choice but to create jobs with it. This is a lie. The wealthy have plenty of places to invest their money other than in business growth and job creation. When an economy suffers a demand crisis, the wealthy will not invest their money in creating jobs that create goods and service that won’t sell due to a lack of customers. They won’t hire more people to make more cars when they can’t sell the cars sitting on the lot. That would be no better than burning their money. In such times, the wealthy find it more profitable to sock away their tax savings in commodities (gold and oil futures – notice how much they go up in a bad economy), investment gambling (short-selling and derivatives) and high end real estate. These are not investments in business growth that create jobs and help the economy. These are simply exchanges of wealth between the rich as they play a financial game of King of the Hill. They effectively keep their tax savings out of the economy. This is why the Reagan-inspired trickle-down effect fails. Tax cuts for the wealthy are the worst possible economic stimulus in a demand crisis.

To track the effectiveness of various forms of economic stimulus, economists calculate what they call multipliers. A multiplier tells us how much our nation’s GDP grows within twelve months after the stimulus has gone into effect. For example, if the government spends one billion dollars and GDP increases by 1.3 billion over the next year, then the modifier has a value of 1.3. Calculating them is not an exact science, since many factors affect GDP, but they help us compare the effectiveness of various forms of economic stimulus.

 

 

Fiscal Stimulus Multipliers (As of the End of 2011)

Tax Cuts
Child Tax Credit 1.38
Earned Income Tax Credit 1.24
Tax Rebate (single check in the mail) 1.22
Spending
Food Stamps 1.71
Unemployment Insurance 1.55
Defense Spending 1.53
Infrastructure Spending 1.44

[Source: “Paying the Price” by Mark Zandi]

 

 

Notice that spending stimulates the economy more than tax cuts. The reason is simple. People who earn enough to pay their bills save their tax cut money rather than spend it and, thus, keep it out of the economy. When the government spends money, however, it does one of three things: it pays its employees, it buys goods and services from American companies who pay their employees, or it distributes it to low income earners and the unemployed who spend almost all of their income on necessities. Money spent by the government goes back into the economy (with the exception of foreign aid and foreign defense spending). The Tea Party acts as though the government ships our tax money into Pluto’s orbit never to be seen again. Taxation doesn’t remove money from the economy; it simply redistributes it, usually from those who hoard it to those who spend it in the economy. Redistribution of wealth, within reason, is great for the economy.