What the Bible Says About Employment

(I am an evangelical Christian and attend a Baptist church in the heart of the Bible belt.)
My pastor quoted this verse yesterday in reference to fasting.

Isaiah 58:3-6
'Why have we fasted,' they say, 'and you have not seen it? Why have we humbled ourselves, and you have not noticed?' Yet on the day of your fasting, you do as you please and exploit all your workers...
Is not this the kind of fasting I have chosen: to loose the chains of injustice and untie the cords of the yoke, to set the oppressed free and break every yoke?

I took this to heart, and also noted the reference to fair treatment of workers (which was not the subject of the sermon).  I think it is time for the Church to address the morality of certain business practices that do great harm to our neighbors and enrich others at their expense.

Leviticus 23:22
'When you reap the harvest of your land, do not reap to the very edges of your field or gather the gleanings of your harvest. Leave them for the poor and the alien. I am the LORD your God.'

Leviticus 19:13
Do not defraud your neighbor or rob him. Do not hold back the wages of a hired man overnight.

Deuteronomy 24:15
Pay him his wages each day before sunset, because he is poor and is counting on it. Otherwise he may cry to the LORD against you, and you will be guilty of sin.

Deuteronomy 25:4
Do not muzzle an ox while it is treading out the grain.

Jeremiah 22:13
Woe to him who builds his palace by unrighteousness, his upper rooms by injustice, making his countrymen work for nothing, not paying them for their labor.

Malachi 3:5
"Then I will draw near to you for judgment; and I will be a swift witness against the sorcerers and against the adulterers and against those who swear falsely, and against those who oppress the wage earner in his wages, the widow and the orphan, and those who turn aside the alien and do not fear Me," says the LORD of hosts.

James 5:4
Look! The wages you failed to pay the workmen who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty.

Jesus' disciples gathered grain from the fields when they were hungry, as did His ancestor Ruth. (Ruth 2:2, Mark 2:23-24).  The commandment to leave the edges of your grainfield for the poor is beautiful because it doesn't require handing out food; the poor can harvest and cook for themselves.  Charity is only required for the truly helpless.

A Christian Response
Why is the second greatest commandment from Jesus "Thou shalt love thy neighbor as thyself"?

Let me ask this another way.  What does the fellow need whom you pass begging on the highway, or whom you see at the thrift shop picking up food for his family?  Enough money to pay his electric bill, or his rent for a month?  This would certainly be an acceptable gift and much appreciated, but next month he will need help again.

What people really need are good jobs.  Since the Garden of Eden, mankind was made to work.  Work gives people not only money, but dignity and family values.  And it prevents crime.

What would the LORD think about those who drive their employees out of the workplace to be replaced by slaves in a foreign land?

I feel passionately about this because I have seen layoffs happen to so many of my colleagues and friends.  Of course most of them found other jobs eventually and this is certainly not limited to my business or industry.  But it is a national tragedy and symptomatic of a spiritual issue.  I believe that the spirit of hedonism is behind this, and the endless pursuit of money.  To the extent that we in the Church participate in this system, we are responsible to speak out against it and to protect people from it.

If you are an employer, my hat is off to you for putting up with a government that treats you like the enemy.  I don't know how you keep up with the time, taxes and regulations required to employ people in this country!  I encourage you to speak up, rather than giving up.  Speak out rather than selling out.

I have never been an employer, but a lot of people work for me.  People care for my lawn, serve me dinner at restaurants, repair my house, and manufacture the products I buy.  I will always treat them fairly and consider their needs when I deal with them.  I will do my best to influence decision makers at work.  I will use my vote to elect people who support family-friendly business practices.  And I will encourage my pastor and friends to discuss the morality of this critical issue in the context of the Bible and the teachings of Jesus.

Will you join me?

The Balooning Deficit - What's Up With That?

Why the budget deficits?  Find out for yourself here:

http://www.washingtonpost.com/wp-srv/special/politics/30-years-spending-priorities-federal-budget-2012/

The Washington Post provides a nice little interactive tool that helps you see where the money has been coming and going for the last 30 years.  For example:

You can see from the charts where the real problems lie.  First, revenues have declined $600 billion from $2.7 trillion in 2007 to $2.1 trillion the last few years.

Second, spending has gone from $3 trillion in 2007 to about $4 trillion each year since.

So breaking it down further, you will see the exponential growth of the entitlement programs, particularly health care-related expenditures.  You will also see the massive doubling of "income security" which is another word for unemployment benefits.  Oddly, that started in the 2010, most likely due to extending unemployment benefits from one year to two years.

On the revenue side, what happened in 2009?  Individual and corporate income taxes declined by $400 billion.  I believe that was due to an abrubt halt in routine investment gains that had been realized in prior years.  You can't really blame unemployment because payroll taxes hardly budged during that time.  Not only did capital gains evaporate and corporate incomes greatly decline, but you now have a carry-over effect with unrealized capital losses limiting tax revenues.

I guess the most disturbing thing to me is that the 2012 budget calls for a $500 billion increase in tax revenues.  If that doesn't happen we could be staring at a $1.6 trillion budget gap in 2012.  And it could get even worse, with a likelihood of much greater expenditures on interest on the national debt.

$1.6 trillion dollar deficit in a single year - whoa.  That is more than the entire federal budget when the first President Bush left office.  Yet I think the average taxpayer's income is probably not much higher than it was then.  (Mine certainly isn't.)

What can be done about this?  We could probably cut $200 billion from expenditures by getting employment back to pre-recession levels.  That might also add $100-200 billion in revenues.  But primarily the problem is the explosive growth of health care spending.  That absolutely must be stopped, and Obama Care is not going to do it.  Consumers absolutely must become aware of their health costs at the point where they make decisions that affect their health.

I recommend reading a book "The Coming Jobs War" by Jim Clifton.  That's a really good book that explains better than I can do in this blog.

No Place for Old Economists

I've been watching some old economists talking about "typically markets do this", or "when the economy returns to historical norms" or some such nonsense.  Maybe the law of supply and demand hasn't changed, but the historical norms of supply and demand in the West don't apply today and probably won't apply again until the world economy is fully globalized (yikes), or I expire (double yikes).

This really does matter to "main street" people because taxes, government spending and all manner of other decisions are based on these guys being right.

So you have one group of old economists called "supply-siders" who believe that if you throw money at the "rich" in the form of tax cuts, economic growth and jobs will just happen.

You have another group of old economists called "Keynesians" or "demand-siders" who believe that if you throw money at the "poor" that they will generate demand and the demand will result in economic growth and jobs will just happen.

Even the Federal Reserve is governed by these old economic views, as they wasted trillions of dollars "shooting in the dark" with easy money, assuming the economy would just magically recover.

Meanwhile we have tax policies designed to solve yesterday's problems of tight labor markets (capital gains tax breaks) and idiotic internet-bubble bad business models (dividend tax breaks).

Yes, it was a good idea back in the 1900s to incent businesses to invest in capital equipment to improve productivity.  It's not so good now - we are awash in productivity to such an extent that we no longer need about 25% of the available labor force in America.

Yes, it may have been a good idea back in the internet bubble to get companies to think about paying dividends instead of pursuing ridiculous, unsustainable revenue opportunities.  Now - not so much.

Now we have a situation where companies can make plenty of money with very little labor and the quality jobs that are available are easily filled with cheaper resources overseas.  But the supply-siders are continuing to push tax cuts and the demand-siders are continuing to push unsustainable government hand-outs.

At some point right-wingers have to say "tax cuts aren't the solution".  And left-wingers have to say "government hand-outs aren't working".  It's really that simple.  But the left continues to move left and the right continues to move right.  Here I am stuck in the middle again, in a vast un-represented waste land.

Van's List
My solutions involve eliminating laws and policies that make things worse.  That is free and simple.  Heres a partial list:

• Repeal Obama-care.  What a load of job-killing complexity and ill-timed policy.  Let's get people back to work so they can afford their own health care.
• Let the Bush tax cuts expire.  There are better ways to promote quality job creation.  If we're going to throw money at the problem, let's identify the problem first.  One thing for sure - those who live on high investment incomes don't need lower tax rates than those who work for a living.  The progressive income tax we have already provides tax breaks for lower income brackets, whether that is investment gains or earned income.
• Replace payroll taxes on both employer and employee with a revenue-neutral adjustment to the income tax, starting with the first dollar of income.  That will eliminate the concept of government-sponsored retirement and health care entitlements, and encourage people to plan their own futures without government subsidies.  It will also eliminate the perverse tax incentives to replace people with technology or offshore labor.
• Reduce unemployment benefits and re-direct that money to companies who will hire and train near-fit candidates from the unemployment rolls.  People need incentives to work, and companies need incentives to hire and train.  That's a policy that fits the economy today, and not one designed for an economy ten to one-hundred years ago.
• Eliminate all the new Obama EPA regulations and send half the EPA back to the college campuses from whence they came.  Thence they can pontificate about the causes of global warming and other idealistic causes du jour.
• One more radical idea - eliminate the exemption from overtime pay for salaried employees.  There is a problem today with companies eliminating jobs and piling more work on existing salaried employees.  This tactic works in a stressed labor market because people have limited alternatives to longer working hours.  And it is self-perpetuating by keeping the labor market stressed.  By eliminating the exemption from overtime, new employees would be cheaper than overtime, and the workload and wealth of jobs would be more evenly distributed.

If you are still with me, welcome to my world!  I'm sure I lost the left and right in that list of bullet items.  Please let me know if you agree (or not) by leaving comments.

Death of Jobs in America

Sad day in America - Steve Jobs is dead.
I looked around for how he handled Apple and one thing caught my eye.  Apple tried to set up operations in Bangalore about 5 years ago, and decided for various reasons that it wouldn't work.  They remained a high-quality employer in Cupertino, CA and made some of the best products in the world.

There is some irony in his name; I hope his death doesn't mean more than the loss of this one Jobs.  God rest his soul.

Update November 7
OK, so Apple is part of the problem too.  Apparently they run sweat shops in China. 

Busting Myths about US Taxes

We have some really bad tax policy here in the USA. I think one reason is that so many people believe myths told by both political parties to distort the truth toward their progressive or conservative agenda.

Here's my list of myths, half-truths and outright lies

1. Half the electorate pays no federal income tax at all
2. Contributions to Social Security and Medicare are held in an account for its beneficiaries
3. A flat tax will simplify the tax code
4. We need to broaden the tax base
5. Clinton's tax increases balanced the budget
6. Ending the Bush tax cuts will destroy the economy
7. Cutting or eliminating corporate taxes is the best way to stimulate growth

Half the electorate pays no federal income tax at all

True, but misleading. Everyone who works and reports their income is taxed around 6.5% (temporarily 4.5%) to pay for Social Security and another 1.5% to pay for Medicare (which is nowhere near enough to cover projected costs). Additionally employers pay another 6.5% on behalf of the employee, which either effectively comes out of their pay or in many cases costs them their job.

One big problem with this form of taxation is that people don't recognize it as taxation and feel entitled to the money they have contributed. The government doesn't treat your contributions this way; it decided long ago to account for this money as general revenues to fund the government.

Another huge problem with this form of taxation is that it only applies to wage income. People who make their money from investments don't contribute to these programs. People with huge salaries and bonuses stop contributing after a few paychecks (I had that experience one very good year.)  Just to be clear - payroll taxes are for the middle class and working poor. Is that right?

Contributions to Social Security and Medicare are held in an account for its beneficiaries

This is an outright lie.  The government makes it appear to be an account by tracking your contributions, but that money is actually spent to fund current beneficiaries.  Your only hope is that a future generation will still be willing and able to pay for you (if you live that long).

A flat tax will simplify the tax code

This is a less-than-half-truth. The number of tax brackets is not where complexity arises in the tax code. Complexity comes from deciding what taxable income is and what deductible expenses are. Don't believe for a minute that the lobbies in Washington will let their deductions and tax credits slip away. Any change to the tax code with the current crew of legislators and lobbyists will likely work in their favor and make the system more complex, not less. The flat tax is related to the next myth, which is broadening the tax base.

We need to broaden the tax base

Those who advocate this would like to raise more revenues from the middle class. Their argument is that most Americans do not participate in the income tax and therefore are not responsible for the basic services they consume. They also believe that you cannot raise significant revenues from the upper class because the diminishing numbers of very rich can't produce any meaningful increase in revenues without hurting the economy.

This is less than half-true because the very rich aren't really doing much for the economy now (in terms of hiring), and in many cases are doing things to hurt the US economy by offshoring manufacturing and information jobs.  Raising taxes on the middle class would likely hurt the economy as much or more than alternatives like letting the Bush tax cuts expire.

Clinton's tax increases balanced the budget

This is a half-truth.  The economy improved under Clinton because of two macro-economic factors largely outside his control, the end of the cold war, and the build-out of the internet.  Unless you believe Al Gore invented the Internet I have news for you, the Internet would have been developed and Y2K-related technology spending would have been about the same under a Republican president.  That had very little to do with politics.

The reduction of military spending allowed the entitlement state to grow without immediate budgetary consequences, and the Internet/technology bubble produced a wave of one-time stock market gains that created the illusion of a balanced budget.  The fact that tax rates were higher during that time amplified the income to the federal government and contributed to the surplus.

Actually that surplus contributed to the recession that started that year.  And it deceived our political leaders into believing that they had unlimited resources to increase entitlement spending and wage wars, while cutting taxes on investors.  So Clinton’s tax policy did increase tax revenues, but the net effect of the temporarily balanced budget was actually quite negative.

Ending the Bush tax cuts will destroy the economy
This is an outright lie.  Those tax cuts did little to help the economy and there are much better ways to use tax policy to produce economic growth today.  Capital gains tax breaks allow the investor class to pay much lower taxes while investing in companies like GE that use capital to create jobs in India and China.  Dividend tax cuts encourage companies to pay their shareholders, but this has the opposite effect on investment capital and doesn’t necessarily encourage companies or shareholders to create jobs or make other beneficial investments.

Who benefits from the Bush tax cuts?  The overwhelming majority of individual shareholders and mutual fund owners hold these investments in tax-deferred accounts.  Those who benefit from the tax breaks are wealthy investors who can’t participate or shelter their income in other ways.  Is it right that someone making their income from investments (like Warren Buffet) pays 15% while those making the same amount from working two or more jobs pay 28-35% of their income plus 15% to Social Security and Medicare?

Cutting or eliminating corporate taxes is the best way to stimulate growth

This is more than half true. Cutting corporate taxes would encourage offshore companies to locate headquarters here, and may encourage small business owners to incorporate and avoid double-taxation of their income.  But unless payroll taxes and regulatory burdens are lifted these companies may still employ offshore labor and manufacturing, thus missing the anticipated benefits and losing tax revenue.

If we’re serious about cutting corporate taxes the place to start is payroll taxes.  This is a tax that is levied on the thing we need most – employment.  And it is only levied on companies that employ Americans.  That is ridiculous and wrong.  Quite the opposite, the US government should be doing anything it can to reward companies that hire and retain American employees.  If there is a need to replace the lost revenues to fund those entitlement programs, it can be raised from tariffs and surcharges on cheap foreign labor.  And that may not even be necessary since the jobs gained from this policy would reduce unemployment costs and increase tax revenues from the new employees.

Finally, let’s talk about simplification of regulations on employers.  It is SO 19^th-century to look on employers as the enemy of labor.  Employers provide benefits and salaries to attract and retain good employees.  They provide record-keeping services and safe work environments and many other benefits, many as required by existing regulations.  Adding to this regulatory burden costs not only money but critical time and focus from businesses.  Now is the time to reach a balance that stops the tide of uncertainty and fear that is holding back our economy.

Businesses need a clear vision, not of short-term targeted incentives for particular types of business, but a long-term clear road ahead that is not barricaded by government regulators and bureaucrats.  And the road ahead should lead back to America.  This is an environment our elected government can help to foster and restore.

A Christmas Story for Labor Day

To commemorate Labor Day, let me bring an old story about greed into a modern American context.

It’s Christmas Eve, and old Ebenezer Scrooge is counting the gold coins he has accumulated as a result of replacing his accounting department with an accounting service based in India.  He’s visited by three ghosts that night.

The first ghost takes him back to his middle class family that always had food on the table, to his first job where his employer was so kind and generous to him, then to his early days as a private entrepreneur who employed a few of his fellow townspeople.

The second ghost appears.  Time has passed, and greed has gotten the better of him.  He takes the company public, brings in new management.  Soon they’re looking for ways to reduce labor costs.  The offshore accounting services are lined up at the door.  Bob Cratchit is feverishly working into the night, training his Indian colleagues on the back office work while he is “positioned” for a sales job.

The third ghost appears and shows him the future.  Bob Cratchit didn’t make quota and was laid off.  Tiny Tim got depressed and died of a drug overdose.  Scrooge is now too old to stay up all night talking with his offshore management company.  He has cashed out his shares to pay for a miracle drug to cure his cancer, but in the end there is nothing left and he expires.  What a pity, but nobody misses him.

Christmas morning arrives and Scrooge awakens determined to change course.  He hires Cratchit back and gives him a raise, but exorbitant taxes and regulations make it unprofitable, and his competition is still boosting productivity with technology and cheap labor.  He goes out of business and dies penniless but at peace with God.

What? I could have ended with something sappy, but sometimes reality bites! The moral message is the same, and it doesn't have to end this way...

Stimulus by Another Name

Aha - we just discovered Wednesday how the Obama Administration plans to stimulate the economy, by using the Department of Justice to block mergers and the resulting consolidation of assets and inevitable layoffs.

Not that there is anything wrong with that (trust busting).  The lawsuit against AT&T to block the T-Mobile acquisition would forestall or prevent the elimination of 34,000 to 60,000 jobs due to the restructuring that would have taken place.


This is stimulus in two ways, preventing layoffs and encouraging companies to build rather than buy assets.  It will effectively force some money out of the clutches of cash-rich companies into either much smaller acquisitions or internal hiring and "organic growth".

If I'm right about this being a "hidden stimulus" measure, you can expect more of these kinds of lawsuits.  It's the kind of big-government idea that Democrats love, pro-consumer and all that.  Of course it will slow productivity growth and ultimately result in more inflation, but the principle of the Federal government enforcing anti-trust policies is not inherently unconsitutional, like so many other things this administration is attempting to do.

In the meantime it will keep lots of lawyers employed (oh joy).  That's another thing Democrats love to do.  Anyway, you gotta hate these phone company monopolies; they're almost as arrogant as government bureaucrats.  Keep them competing, that's fine with me.