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Economics as Religion

A Violation of Spiritual Values

C. Gourgey, Ph.D.

Normally this web site refrains from taking political positions. Jesus was no political partisan. He loved the poor (Lazarus) and the rich (Zacchaeus). No political group can claim exclusive rights to Jesus - even though many of them try, from liberation theologians to evangelical conservatives. Jesus stands above all of them, calling them all to judgment.

Nevertheless, when a political issue involves a blatant transgression of spiritual values, as well as a negation of everything Christ stood for, then it deserves comment in a setting like this one. I am referring to the war on poor people now being waged in the United States, in the name of a discredited economic religion known as “Trickle Down.”

The Occupy Wall Street movement, which has lately been attracting much attention, has been criticized for its slogan “We are the 99%.” Yet those who chant these words seem to have a point. Income disparity has been increasing in this country. A report just issued by the Congressional Budget Office confirms that during the past three decades, income share for the top 1% has tripled, while middle class incomes have stagnated. “To put the growing disparity of income distribution in a slightly different perspective: Between 2005 and 2007, the top one-fifth of earners in America earned more money than the bottom fourth-fifths” (1).

Clearly, the top 1% have no need of any further financial aid, and the top 20% are not doing too badly either. Nevertheless, prominent Republicans seem to be staying up nights trying to figure out ways to further redistribute income from the poor to the rich. The latest gimmick to catch fire is the so-called “flat tax.” It has emerged before in presidential campaigns, but partisan passion for it now seems greater than ever. Republican presidential candidates Herman Cain and Rick Perry have staunchly championed it. Even Mitt Romney, who once called the flat tax a “tax cut for fat cats,” is changing his tone, saying that in principle a flat tax is a very desirable thing (“I love a flat tax”) even though in practice he has not adopted it. A spokesperson for the Romney campaign even said that Romney could support a flat tax that does not raise taxes (2).

Think about this for just one minute. In order to have a flat tax that is revenue neutral instead of the progressive tax we have now, the middle and lower classes will have to pay much more in absolute terms to offset what the wealthy will be gaining through the reduction of their progressive tax rate. In our present economy, do we really need to penalize more those who are earning less? When Romney says “does not raise taxes,” does he mean even after present tax loopholes get plugged (a promise always made but never kept)? Then plugging those loopholes will not increase revenue, so who really benefits? You cannot have a revenue neutral flat tax that does not penalize the poor and the middle class - it is mathematically impossible. Then what about that other Republican mantra, balancing the budget? The only way you can lower taxes and balance the budget is to cut services to people who are already suffering. And that seems just fine with Republicans.

Rick Perry’s plan is to cut taxes for the top 20%, precisely those who have been doing the best and suffering the least under this difficult economy. Perry would even eliminate taxes on dividends and capital gains. Here is what Perry said in a recent interview:

Q: Do you fundamentally believe we should not have a progressive tax system in this country?

A: I do. I think you need to have a tax system that basically is flat, fair and simple. And that you can put on a postcard. Americans, I hope, aspire to be wealthy. (3)

Note that Perry calls shifting the burden from those who are wealthy to those who aren't a tax that’s “fair.” Why not? Everyone hopes to be rich some day, and perhaps to benefit from Republican plans that favor the rich at the expense of the poor, so this plan should have mass appeal. If you’re exploited today, you can be an exploiter tomorrow. What a country.

Let’s be fair to Rick Perry. He does give his reasons for supporting economic inequality. From the same interview:

We’re trying to get this country working again. And that’s what I focus on. We went through what are the ways to really give incentives to those that are going to risk their capital to create the jobs. Those that want to get into the class warfare and talk about, oh my goodness, there are going to be some folks here who make more money out of this, or have access to more money, I’ll let them do that. (3)

It is almost too tempting to address this “class warfare” accusation now, but I’ll save it for later. This comment from Perry illustrates why I have called this economic philosophy a “religion.” If we think of “religion” in a traditional sense, as the reiteration of belief without evidence, then that’s exactly what this is. Repeat the incantation “tax cuts for the wealthy = jobs” often enough, and you begin to believe it. But there is no evidence for it.

A number of economists have exploded this myth. Management consultant Peter Cohan points out that corporate tax rates are already low, yet unemployment is high. “Do tax cuts create ‘real’ jobs?” he asks.

The answer appears to be no for companies big and small. After all, U.S. public companies pay well below the official 35% tax rate while 13.5 million American workers search unsuccessfully for jobs. And start ups tell me that tax cuts don’t affect whether they’ll create new jobs. In short, the tax cut rhetoric, while effective politics, is lousy economics....

Despite $858 billion in December 2010 tax cuts, companies still complain that they pay too much in tax. General Electric (GE) has become famous for paying no taxes on its $5.1 billion in 2010 U.S. profits while keeping a big staff of lawyers on hand to make sure it pays as few of them as possible. Meanwhile, the New York Times reports that GE is not alone and that the prevailing estimate for the actual U.S. corporate tax rate is 25% - costing the U.S. about $100 billion in lost revenue.

But corporations have absolutely no reason to complain about taxes. After all, they earned record 2010 profits of $1.68 trillion and 85% of them are beating their first quarter 2011 earnings estimates as 70% are growing revenue faster than expected while their operating margins stand at a near record 19.8%.

And companies are achieving that record profitability by squeezing workers. After all, 2010 productivity rose 3.9% while unit labor costs fell 1.5%. To get more work out of the same number of workers while paying them less, it helps to have 13.5 million people out of work and the easy ability to hire part-time labor and outsource to countries that pay much lower wages. (4)

Many economic observers also note that businesses do not create jobs from any sense of noblesse oblige, but only when consumer demand justifies it. Cohan continues:

So tax cuts have not spurred big companies to create jobs. But what about start ups? Based on my October 2010 interviews with 17 start up CEOs, my conclusion is that not a single one of them would create a job based on tax cuts. All of them told me that their decision to create a new job would be based on whether the long-term cost of that new job would be offset by higher revenues and profits. (4)

Houston Chronicle business columnist Loren Steffy similarly observes:

If the driver of job creation is a lower corporate tax burden, then we should be awash in newly created jobs. Regardless of the stated rates, the U.S. has the lowest corporate tax burden of any Western nation, and corporate tax revenue as a percentage of GDP is near historical lows. In other words, whatever the rate, corporations are actually paying less in taxes than they have in decades, yet unemployment remains above 9 percent. (5)

Bruce Bartlett served as an economic advisor to President Ronald Reagan and in the Treasury Department under President George H.W. Bush. He confirms that current tax rates are unusually low. Nevertheless,

Just last week, House Republicans released a new plan to reduce unemployment. Its principal provision would reduce the top statutory income tax rate on businesses and individuals to 25 percent from 35 percent. No evidence was offered for the Republican argument that cutting taxes for the well-to-do and big corporations would reduce unemployment; it was simply asserted as self-evident. (6)

Here again we have the new economic religion: Just take it on faith. Evidence not required.

And yet Republicans complain that corporate taxes are too high. Bartlett continues:

If taxes are low historically and in comparison with our global competitors, how are Republicans able to maintain that taxes are excessively high? They do so by ignoring the effective tax rate and concentrating solely on the statutory tax rate, which is often manipulated to make it appear that rates are much higher than they really are. (6)

Economist Chuck Marr elucidates:

Corporate tax revenues are now at historical lows as a share of the economy... at a time when the nation faces deficits and debt that are expected to grow to unsustainable levels. Although the top statutory corporate tax rate is high, the average tax rate - that is, the share of profits that companies actually pay in taxes - is substantially lower because of the tax code’s many preferences (deductions, credits and other write-offs that corporations can take to reduce their taxes). Moreover, when measured as a share of the economy, U.S. corporate tax receipts are actually low compared to other developed countries. (7)

So with all these low rates and tax cuts already in effect (including the Bush tax cuts, which have yet to expire), where is the jobs creation benefit? It’s more elusive than Iraq’s WMD. Bush Senior definitely knew what he was talking about when he called it “voodoo economics.” How many tax breaks do the wealthy want, how many services to the poor do we need to cut, before we can say we have arrived?

Class Warfare (a.k.a. “Starve the Beast”)

The notion that the wealthy need their tax rates cut in order to benefit the poor really is as absurd as it sounds. As we have seen, it has no basis in reality. Yet those who dare to criticize this strange dogma must routinely contend with accusations of fomenting “class warfare.” This merits closer examination.

Is there class warfare in this country? You bet there is. Warren Buffet stated it well: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning” (8). What we commonly call the “financial crisis” has amounted to an enormous transfer of wealth from the poor to the rich. People are losing their jobs; people are losing their homes. Meanwhile executive compensation is as inflated as ever. Corporate leaders reap rich rewards regardless of their performance, while pleading poverty and cutting back on hiring. Investment advisor Josh Brown puts a figure on it:

The American taxpayer kicked in over a trillion dollars to help make all of this happen. But the banks didn’t hold up their end of the bargain. The banks didn’t seize this opportunity, this second chance to re-enter society as a constructive agent of commerce. Instead, they went back to business as usual. With $20 billion in bonuses paid during 2009. Another $20 billion in bonuses paid in 2010. And they did this with the profits they earned from zero percent interest rates that actually acted as a tax on the rest of the economy. (9)

Brown states that the public is understandably upset when banks “pay fired executives more in severance than the average American worker will earn in a lifetime” (10). He continues:

For most people on the outside looking in, this seems like it’s from outer space, another world entirely. These numbers just do not exist to regular human beings, they cannot be fathomed. The ordinary American is not a class warrior or a woe-is-me whiner coveting the rewards of others - the ordinary American simply believes that extraordinary rewards should go to those who do extraordinary things, not to paper-pushing failures at parasite banks. (10)

I work in the nursing home system, where one can witness the results of real class warfare. It is common for head administrators of nursing homes to receive annual compensation of a quarter million dollars, or half a million dollars, or even more. Yet nursing homes universally complain they lack the funds to hire adequate staff. How many nurses’ aides, I wonder, could a nursing home hire if it compensated its top administrative staff in better proportion to reality?

In one nursing home I have seen, the situation is particularly grave. This home is part of the city system, serving the poorest of the poor. Unfortunately, it sits on land that is greatly coveted, and that the city wishes to sell. So the city plans to close this institution, with resulting pressure on staff to discharge as many residents as they can. Unfortunately, low-cost housing is hard to come by, and already I have heard stories of residents being discharged into unsafe environments and ending up on the street. The problem is bound to get worse as the closing date approaches and discharges accelerate. So far I have not heard one politician from either party claiming the thinnest sliver of care about what happens to these people, or people like them. Yet their ranks will be sure to increase if the Republican agenda passes and greater cuts in services to the poor become necessary due to more tax breaks for the wealthy. “Starve the beast!” is the battle cry of conservatives who want to force cuts in government spending by limiting revenue. It seems to escape them that they are not merely harming some mythical behemoth they like to call “Big Government” but real people, including children and families.

One of the greatest ironies of this discussion concerns how deftly the Republicans have played the politics of resentment. They stay up late thinking of ways they can widen even further the chasm between the rich and the poor; then when people complain about it they are accused of “class warmongering.” One effective tactic practiced by the privileged class has been to encourage middle class resentment by claiming that poor people who receive services paid for by taxpayer dollars are “spending other people’s money.” This may be one reason the public outcry has not been even greater (though I don’t expect that to last). The Tea Party has certainly not hesitated to display its resentment, apparently believing that it’s the poor in the form of “Big Government,” rather than the wealthy few who really do have power to influence the system, who are picking their pockets. What the Tea Party sympathizers don't seem to get is that anyone who benefits from a taxpayer-funded service is “spending other people’s money.” Another name for that is “community.”

Our Calvinist heritage may partly account for this tendency to resent the poor: it stresses how God reveals the favored ones by blessing them with wealth, rewarding them for their hard work. Once again we encounter the confounding of economics with religion. Religion news writer David Gibson explains:

This kind of economic theology is being trumpeted most effectively by the Republican Party, especially GOP presidential hopefuls Rick Perry and Michele Bachmann. “Political candidates can promote economic conservatism and a lack of government regulation merely by referring to an engaged God,” [Baylor sociologist Paul] Froese said. “It works because many rank-and-file voters believe that a lack of government regulation and lower taxes is part of God’s plan.”

This approach also works politically because, contrary to what one might expect, Americans with lower incomes and less education are more likely to believe that God has a plan for their lives - and that when it comes to the economy, the best government is that which governs least. (11)

Yet there is something wrong with the logic of blaming the poor for their poverty, or praising the rich for their wealth. We are all endowed with different talents and interests. Some have a talent for making money. Is that any more laudable than a talent for playing the piano, or cooking spaghetti? Is a nurse’s aide or home attendant, who can barely manage to make ends meet, to be blamed because she didn’t become a hedge fund manager? And which of these actually contributes more to society? Would the divinely blessed wealthy prefer that all people in low-paying jobs leave them for more lucrative aspirations? Then who would take care of their children, or of them when they get old?

“Do not let the wealthy boast in their wealth” said the prophet (Jeremiah 9:23). No one gets wealthy on his or her own, with no debt or responsibility to others. From former White House financial reform advisor and Massachusetts Senate candidate Elizabeth Warren:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along. (12)

If it is class warfare to decry the manipulation of the system to concentrate wealth in the hands of the few at the expense of the many, then Isaiah was a class warrior, and Jesus was a class warrior. What does God demand of us? “Is it not to share your bread with the hungry, and bring the homeless poor into your house; when you see the naked, to cover them, and not to hide yourself from your own kin?” (Isaiah 58:7). Well, that’s pretty hard to do while we’re blaming the homeless for their homelessness. “For I was hungry and you gave me food, I was thirsty and you gave me something to drink, I was a stranger and you welcomed me, I was naked and you gave me clothing, I was sick and you took care of me, I was in prison and you visited me” (Matthew 25:35-36). That’s all well and good, only we may have to cut back on a lot of that so we can give the rich money to create more jobs.

It amazes me how many subscribers to the faith of Trickle Down wear their Christian faith proudly, gathering every week to worship a man who devoted his life to defending the poor, while they blame the poor for their problems. Have they, especially the wealthiest among them, paid attention when the following scripture was read?

There was a rich man who was dressed in purple and fine linen and who feasted sumptuously every day. And at his gate lay a poor man named Lazarus, covered with sores, who longed to satisfy his hunger with what fell from the rich man’s table; even the dogs would come and lick his sores. The poor man died and was carried away by the angels to be with Abraham. The rich man also died and was buried. In Hades, where he was being tormented, he looked up and saw Abraham far away with Lazarus by his side. He called out, “Father Abraham, have mercy on me, and send Lazarus to dip the tip of his finger in water and cool my tongue; for I am in agony in these flames.” But Abraham said, “Child, remember that during your lifetime you received your good things, and Lazarus in like manner evil things; but now he is comforted here, and you are in agony. Besides all this, between you and us a great chasm has been fixed, so that those who might want to pass from here to you cannot do so, and no one can cross from there to us.” He said, “Then, father, I beg you to send him to my father’s house - for I have five brothers - that he may warn them, so that they will not also come into this place of torment.” Abraham replied, “They have Moses and the prophets; they should listen to them.” He said, “No, father Abraham; but if someone goes to them from the dead, they will repent.” He said to him, “If they do not listen to Moses and the prophets, neither will they be convinced even if someone rises from the dead.” (Luke 16:19-31)

If Jesus were to come back today and preach this parable, most likely he would be accused of practicing class warfare.

Well, wasn’t Jesus a class warrior? Didn’t he say this:

Then Jesus looked around and said to his disciples, “How hard it will be for those who have wealth to enter the kingdom of God!” And the disciples were perplexed at these words. But Jesus said to them again, “Children, how hard it is to enter the kingdom of God! It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.” (Mark10:23-25)

We need to understand this passage for the insight it contains. Jesus did not hate rich people, nor did he exclude them from the kingdom, as his love for Zacchaeus proved. But it is hard for those who have more than they need to empathize and thus acquire compassion for those who have less. And without compassion we cannot be close to God, no matter how frequently we attend church or recite our prayers. Those who most passionately profess both their faith in Christ and their faith in Trickle Down are living proof of Christ’s own words as recorded here by Mark.

It is so easy to hear the sacred word and not be transformed by it, or to think that a profession of faith without a transformation of the heart is sufficient. But if we really believe these teachings of Christ are the living word, then we have to take them seriously. At the very least, they should shake us loose from complacency. In the Gospels Jesus clearly and unmistakably teaches that believing is not enough, that we must be thoroughly changed, and that one’s faith can be judged by one’s treatment of the poor. This message has equal meaning for believer and nonbeliever, for Christian and non-Christian. Just read Matthew 25: God does not care what faith you profess, but what is in your heart, and how you express that towards those who are less fortunate than you are. When we survey today’s political landscape, including the behavior of those who claim to be Christ’s most committed followers, it is clear that Jesus was not only ahead of his own time but of ours as well. Do we have the courage - and the humility - to catch up?


(1). CBS News. “CBO: Top 1% Getting Exponentially Richer.” cbsnews.com, October 25, 2011.

(2). The Dismal Political Economist. “Mitt Romney Flips on Flat Tax.” The Dismal Political Economist, October 26, 2011.

(3). Harwood, John. “10 Questions for Rick Perry.” nytimes.com, October 25, 2011.

(4). Cohan, Peter. “Do Tax Cuts Create Jobs?.” Forbes, May 3, 2011.

(5).Steffy, Loren. “Would a lower corporate tax rate create jobs?.” chron.com, September 20, 2011.

(6). Bartlett, Bruce. “Are Taxes in the U.S. High or Low?.” nytimes.com, May 31, 2011.

(7). Marr, Chuck. “What Should Corporate Tax Reform Look Like?.” Off the Charts, March 1, 2011.

(8). Stein, Ben. “In Class Warfare, Guess Which Class Is Winning.” New York Times, November 26, 2006.

(9). Brown, Josh. “Dear Wall Street, This Is Why The People Are Angry.” National Public Radio, October 14, 2011.

(10). Brown, Josh. “This is Why They Hate You and Want You to Die.” The Reformed Broker, October 9, 2011.

(11). Gibson, David. “‘Protestant Ethic’ Still Sways Dreams of Wealth.” The Christian Century, September 29, 2011.

(12). Madison, Lucy. “Elizabeth Warren: ‘There Is Nobody in This Country Who Got Rich on His Own’.” cbsnews.com, September 22, 2011.

October 2011