Tag Archives: Capitalism

Commentary

Christian professor of economics discusses capitalism, socialism and the Bible

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Here’s an interview with Dr. Shawn Ritenour, economics professor at Grove City College. The interview is conducted by Dr. Paul Kengor.

Excerpt:

Kengor: …it seems that the very foundation of economics, not to mention the American republic in some respects, is the right to private property. Do you agree? If so, is that Scriptural?

Ritenour: The foundation of economic activity and policy is private property. All action requires the use of property and all economic policy is about how people can legally use their property. To benefit from the division of labor, we must be able to exchange our products, which requires private property. Private property is definitely Scriptural. The Bible explicitly prohibits theft, fraud, moving property barriers, debasing money, violating labor contracts, as well as coveting. These prohibitions apply to both citizens and rulers. In my text, I apply this conclusion to issues such as confiscatory taxation, government subsidies, business regulation, and monetary inflation.

Kengor: I find it very telling that Karl Marx was first and foremost against private property, not to mention against God as well. In the “Communist Manifesto,” he wrote plainly: “the theory of the Communists may be summed up in a single sentence: Abolition of private property.” And yet, there are some religious left Christians who claim that the Bible, especially in certain Old Testament passages, preaches a form of socialism and even communism. A student of mine had a teacher at a private Christian school in Ohio who instructed the class that as Christians they should be communists. Can you address this argument?

Ritenour: Communism can be condemned strictly on the basis of the Christian ethic of property (among other reasons). Nothing in Scripture either commands or implies that the means of production should be controlled by the state. There are passages in the early chapters of Acts that are often cited as promoting “Christian communism,” but, in fact, actually illustrate Christian sharing. The various Christians still owned their property, but were generous in sharing whenever they saw a need. When Peter rebukes Ananias in Acts 5, he explicitly says that both the property that Ananias and Sapphira sold and the monetary proceeds from selling it were theirs to do with what they wanted. That is not the gospel according to Marx.

Kengor: I like the way you turn the religious left’s thinking on private property on its head. You note that “God prohibits our coveting the property of others.” With that being the case, isn’t it wrong for the government to use the mighty arm of the state to forcibly remove property from one person to give it to another?

Ritenour: I see no other way around that conclusion, especially when we realize that, in our day of mass democracy, the state usually accomplishes policies of wealth redistribution by inciting envy and covetousness among the populace.

Kengor: What about profits? Reconcile the profit motive with the God of Scripture. We have people in this society who portray profits as greedy or unjust.

Ritenour: Profit is the reward entrepreneurs receive for more successfully producing what people want. This is no easy thing to do. Entrepreneurs must invest in present production of goods they sell in the future. Neither entrepreneurs nor government bureaucrats know exactly what future demand will be. Therefore, production necessitates bearing risk. If the entrepreneur forecasts future demand incorrectly, he will waste resources and reap losses. If he forecasts the future correctly, he serves his fellow man by producing goods people want. It seems only right that such producers are rewarded with profit. In a free market, the only way entrepreneurs earn profits is to serve customers better than anyone else.

I’m a fan of Paul Kengor’s work. If I had married and had children, I would have wanted them to go to Grove City College for their undergraduate degrees. Astronomer Guillermo Gonzalez is at Grove City right now, directing a program in astronomy.

Should Christians study other areas of knowledge like economics?

Here’s a quote from McKenzie’s Facebook page that explains why I think Christians need to understand economics.

Quote:

“If inviting nonbelievers to worship matters, then so does preserving the freedom to worship. If ministering to the needs of the poor is a mandate, then changing the policies creating poverty is very much within that mandate. And if building shelter in developing countries is part and parcel of a Christian’s burden, so… is the destruction of the power of tyrants who oppress peoples around the globe.”

It’s from Hugh Hewitt’s book “In, But Not Of”. The book is about how Christians need to make good decisions early on in life if they hope to influence the world in effective ways. This is an excellent book for young people in high school and university, or for those (like me) who dream of raising children in a careful way, so they can impact the world for Christ. My hope is to raise Michele Bachmann and Jennifer Roback Morse clones.

By the way, you can be my friend on Facebook. My Facebook page is here. And you can also follow the blog here, you have a Facebook account. (Although we get about 1000-1500 page views per day, I have only a small number of Facebook friends and followers).

Further study

News

More companies announce massive losses as a result of Obamacare

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From Associated Press. (H/T Ace of Spades via ECM)

Excerpt:

Insurer Prudential Financial Inc. said Monday that it will take a $100 million charge in the first quarter in relation to the recent health care overhaul legislation.

The life insurance and annuities provider said in a regulatory filing that it will take the charge against earnings in the first quarter.

Prudential joins a growing list of companies that have said they will take accounting charges because of the health care bills. AT&T said last week it would take a $1 billion charge in the first quarter. AK Steel Corp., 3M Co., Caterpillar Inc., Deere & Co. and Valero Energy have also said they would take smaller charges.

Prudential said in a filing with the Securities and Exchange Commission that the health bill signed into law by President Barack Obama last week and a companion measure he is expected to sign Tuesday will reduce its tax deduction for retiree health care costs beginning in 2013.

Companies that provide prescription drug benefits for retirees have been getting subsidies covering 28 percent of eligible costs but could deduct everything they spent on the benefits — including the federal money — from their taxable income.

Normally I oppose subsidies, but this one one was keeping the elderly off the even more wasteful Medicare prescription drug plan. (I hate that plan – it was a huge mistake made by an otherwise good president). These companies are going to dump the pensioners onto Medicare and it will cost EVEN MORE to have an inefficient government run the program, with all the waste and fraud that plagues Medicare now.

Ace writes:

That subsidy was to induce companies to keep retirees on their own corporate plans rather than dump them into taxpayer-funded Medicare. Now that they’ve cut the subsidy, not only is it costing these businesses money, but many are thinking of giving up the subsidy and dumping them into government health care.

Remember, if you like your insurance, you get to keep your insurance.

And Henry Waxman is going to drag these CEOs in front of his committee, to harass and threaten them, and badger them into answering why they’re bound to accurately account for additional new tax costs.

In fact, Waxman doesn’t want an answer to that; what he wants is for companies to hide these new, embarrassing costs illegally, so that Democrats don’t have to answer questions about them. And he figures harassment and the threat of punitive legislative action should be enough to give other companies the hint.

Preemptive Strike? Rich Lowry says it’s part of the Democrats’ plan to claim that all negative consequences of this bill are due to a conspiracy between evil corporations.

Meanwhile, National Review has a related story from PRNewswire. (H/T ECM)

Excerpt:

Illinois Tool Works Inc. (NYSE: ITW) today announced that as a result of certain provisions in the recently enacted Patient Protection and Affordable Health Care program, future Medicare prescription drug subsidies received by the Company for retiree prescription drug coverage will now be taxable.  As a result, the Company expects to record a discrete tax adjustment of $22 million, or 4 cents of diluted income per share from continuing operations, in its 2010 first quarter results to reflect this change in tax treatment.  This discrete tax adjustment was not included in the Company’s March 15, 2010 revised earnings forecast.

Wow. We’re in freaking North Korea now. Next time, don’t vote for the radical socialist. Socialism makes jobs go away. This is not a surprise to anyone on the right. We know these things because we’re grown ups. We know how the world works. Happy talk doesn’t grow the economy.

Related: Other companies take massive losses after Obamacare passes.

News

How are big companies responding to Obamacare?

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Caterpillar and John Deere. (H/T Hot Air via ECM)

Excerpt:

Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation.

[…]The charge is expected to be a one-time cost, but Caterpillar has argued that higher taxes and other potential cost increases related to insurance coverage mandates in the legislation will hinder the company’s recovery this year after a 75% plunge in income during 2009.

“From our point of view, a tax increase like this cannot come at a worse time,” said Jim Dugan, a Caterpillar spokesman.

[…]Farm equipment maker Deere expects after-tax expenses to rise by $150 million this year as a result of the health care reform law President Barack Obama signed this week.

Most of the higher expense will come in Deere’s second quarter, the company said on Thursday. The expense was not included in the company’s earlier 2010 forecast, which called for net income of about $1.3 billion.

The law could raise expenses for large U.S. employers. Industrial companies, which typically have large numbers of retirees, may be among those facing the biggest bill. Caterpillar had argued before the legislation passed that health reform would put it at a disadvantage against global competitors.

And National Review reports on Verizon. (H/T ECM)

Excerpt:

Yesterday I posted a memo that Verizon sent to its employees concerning its view that the Democrats’ health-care bill would probably cause its costs to go up. Specifically, the memo keyed in on a change in the tax treatment of the Medicare Part D retiree drug subsidy. This is a subsidy that the government pays to employers that offer prescription-drug coverage to their retirees; it was created as part of the Medicare prescription-drug entitlement to encourage employers not to dump their retirees into the public system. As the Wall Street Journal editorial board reports today, the subsidy costs taxpayers $665 per person, “while the same Medicare coverage would cost $1,209.”

As part of their effort to keep their health-care bill deficit-neutral, the Democrats changed the law and exposed the subsidy to the 35 percent corporate income tax rate, adding $5.4 billion in revenue to the bill. In its memo to employees, Verizon warned that this tax change would make the subsidy “less valuable to employers, like Verizon, and as a result, may have significant implications for both retirees and employers.” This is a clear sign that Verizon and other employers will probably drop their retiree prescription-drug coverage, leaving Medicare Part D to pick up the slack.

UPDATE: More from National Review. (H/T ECM)

Excerpt:

AK Steele Holding Corp., “the third largest U.S. steelmaker by sales, said it will record a non-cash charge of about $31 million resulting from the health-care overhaul signed into law by President Barack Obama. The charge will be recorded in the first quarter of 2010.”

Valero Energy “will take a $15 million to $20 million charge to second-quarter earnings for the same reason.”

Medical-device maker Medtronic “warned that new taxes on its products could force it to lay off a thousand workers.”

And more from National Review. (H/T ECM)

Excerpt:

Wow: “U.S. companies employed 3.9 million fewer workers in January 2010 than they did one year earlier.”

If you will recall, when touting the stimulus, President Obama and his team declared that “a package in the range that the President-Elect has discussed is expected to create between three and four million jobs by the end of 2010 . . . More than 90 percent of the jobs created are likely to be in the private sector.”

90 percent of three million jobs would be 2.7 million jobs. Yet we’re 3.9 million lower than when we started.

To meet the goal by the deadline, the country would have to create 6.6 million jobs in the next nine months. or more than 733,000 jobs per month for three quarters of the year.

UPDATE 2: Now Business Week reports that AT&T is screwed.

Excerpt:

AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.

A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.

Hey! Do you know what causes outsourcing of jobs? DEMOCRATS. Democrats cause jobs to be shipped overseas. Democrats hate companies. Companies hire people. Democrats cause American manufacturing jobs to be shipped overseas. Democrats cause unemployment. That’s why the unemployment rate is double what it was under Ronald Reagan and George W. Bush. Democrats cause unemployment.

How do jobs get created, anyway?

Do you know what really works to create jobs?

I mean – do you know what actually has worked in the past to create jobs?

The Heritage Foundation reports:

President Ronald Reagan’s record includes sweeping economic reforms and deep across-the-board tax cuts, market deregulation, and sound monetary policies to contain inflation. His policies resulted in the largest peacetime economic boom in American history and nearly 35 million more jobs.

See:

That’s what actually worked.

Free. Market. Capitalism. Works.