Pensees: Nickle and Dimed, On (Not) Getting by in America

You wrote, “However, while it is incredibly naive to insist that capitalism is the best hope for the poor…”

It’s not naivete (or a misguiding mixing of Americanism with Christianity), that produces that assertion, it’s simple understanding of history. No other system has ever produced anything even close to the opportunities for the poor to advance and prosper that capitalism does. So I insist, based on centuries of quite clear and compelling evidence that capitalism is indeed the best hope for the poor.

According to the Census Bureau (noted right-wing Christianist agency that they are) the poor in America are not exactly poor when compared to most of the rest of the world:

-Forty-six percent of all “poor” households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
-Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
-Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
-The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
-Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
-Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
-Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
-Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.

I’ve seen and studied the results of increased government control of the economy, and thanks, but no thanks. Our current economic system is already more socialist than capitalist (and becoming more so every day) but it still produces vastly more opportunity than any other in the world. I would be curious to hear though, since you disdain capitalism and fear socialism what you would suggest as an alternative.

Oh yes, and on the pro-Wal-Mart charge, you did see the study released this week that the closer you live to Wal-Mart the less likely you are to be overweight, right?

I don’t disdain capitalism. I disdain the notion that capitalism is the panacea of social ills, particularly poverty. And, furthermore, what kind of capitalism are we talking about? It might be argued that capitalism has helped the poor more than any other system, but as the Chinese Premiere Zhou En-lai supposedly said when asked how significant the French Revolution was to world history, “It’s too soon to tell.”

The French poor do significantly better than the American poor on a day by day basis. Practically. The problem is that it is a system, as I noted that results in proletarianization by design. Capitalism unchecked (key word) is also resulting in a proletarianization of its own kind. It is proletarianization by default. I personally think Ehrenriech shows the practical effect of this in ways that relate to the average American.

I didn’t claim to reject capitalism and embrace socialism, a system that is realistically what Marx thought it to be, an intermediate step between capitalism and communism. Because even nominal communist countries practice out of necessity state capitalism.

The point I am attempting to make is that we as Christians cannot think in terms of capitalism and socialism but in terms of justice and truth. It is hardly Christian to dismiss the single mother who is living in her car (and, yes, that really happens) by telling her that she is “rich” compared to so many other poor in the world. If we want to define poverty by comparison that it is only just to compare it in both directions. If we want to elevate her status of poor to “richer than others in the world” by telling her to suck it up then we should allow our status to be lowered to “richer than others in the world” and not cool our homes as much, sucking it up: which is exactly what Obama wants to do and has proposed. I don’t like the idea.

Therefore, I think both sides are wrong.

I didn’t say I had the answers.

Bob,

I confess I have little expertise in economics. Regarding raising minimum wage, how do you answer the argument that doing so simply makes it harder for the least skilled to get a job? In my experience, those who start at mimmimum wage and prove to be reliable soon rise above that level. Until the recent recession, most employers around here had to pay more than minimum wage to attract workers. Only young teens and the totally uneducated earned mimimum wage.

Also, what about the argument, why not raise the minimum wage to $50.00 an hour? If that is recognized as unreasonable and unsustainable, who is qualified to set the “right” mimimum wage? Don’t we need free market exchange to determine what wages should be? Isn’t labor another form of economic exchange, like buying and selling, the worker selling his labor, and the employer purchasing labor on the market according to prevailing economic conditions? Do you think government should set a mimimum price for, say tires, or anything else?

Just wondering.

Warm regards,
G. N. Barkman

It may help to redefine things a little bit. Capitalism, socialism, et al, could be seen not so much as economic systems but rather environments in which we operate as believers.

The question would be, “Which economic environment should we strive for in order that we may glorify God as holy and loving stewards?”

Garry

Pastor Barkman, I love the interaction. I’m thinking out loud on these things and embrace the disagreement because it makes me think. And I confess to not having any expertise, but here goes an attempt at a response…..

First of all, it seems that the problem of the minimum wage is that we already have it. In my mind that forces the discussion on what is “minimum” and on what grounds “minimum” is determined. I tend to agree with the liberals that it becomes a moral question.

If, however, no minimum wage existed then I can see how an unskilled worker can sell his commodity (his labor) to the highest bidder. In some markets perhaps there is going to be competition for labor despite the minimum wage, but in a recession as you noted things radically change and, in some cases, retail places can discharge themselves of the higher wage people who have proven themselves over time and replace them with a ready crop of people at minimum wage or higher the former employees back for less. Thus, in my town people are abused by their employers who lay off and re-hire at will. The current minimum wages laws keep people enslaved.

I’m pragmatic, I admit, when I think the minimum should go up since it is unrealistic to think it will actually go away. People should be able to actually make a living on minimum wage. The current minimum wage neutralizes the human being’s control over his “commodity” and ultimately leaves the employer in charge of that commodity. The employer doesn’t have to be creative to figure out how to do business and pay the worker what his commodity is actually worth because minimum wage has secured a ready pool of helpless workers, but the worker doesn’t have the power to “undersell” his competitors. Thus, I think, minimum wage ultimately hurts the worker because it’s not enough to live by but it leaves him completely out of control of his commodity. Since minimum wage is not going away, I think it ought to be raised for the sake of justice.

I agree, I think, that no minimum wage would be better theoretically and, probably even practically, because both worker and employer are on equal grounds when it comes to dealing with their commodity.

I realize this sounds like I speak out of both sides of my mouth. But again, my problem is not with capitalism, but with the notion that capitalism is really helping the poor. Wal-mart is capitalism at its best, but I personally disdain Wal-mart for the way I know it treats its employees. I already know that socialism won’t help in the long run, although it is certain that it helps more in the immediate day in and day out concerns.

As confused as this sounds, I’ll post it anyway. The interaction is instructive.

Bob,

I love your blog, and your willingess to tackle so many of the tough questions that many of us don’t think that much about.

True, we already have a minimum wage, but where I live, most workers earn more. Even in the present recession, I don’t think very many business are able to hire dependable workers at minimum wage. They have to offer more. Market conditions require it.

But you still haven’t answered the question, What do you think the minimum should be? Ten dollars an hour? Fifteen? Why not make it twenty five, so everybody can earn a “living” wage (whatever that is). But, won’t that price most teens out of the market for entry level part-time jobs? Won’t that make it almost impossible for the poorly educated to get any job at all? What good is to raise the minimum wage if the result is businesses finding ways to hire fewer workers? A significant increase in the cost of labor reduces the comparative cost of technology, so businesses will have greater incentive to invest in whatever enables them to hire fewer workers. Who benefits from that?

Shouldn’t our experience with the American steel industry, and now the automobile industry show us that when labor costs are increased artifically by, say, laws that force companies to use union labor at higher costs than free market, competetive forces would allow, jobs are lost or driven overseas, and the end result is fewer jobs? What good is a high minimum wage if there are fewer jobs as a result?

Shouldn’t market forces determine the value of one’s labor?

Cordially,
G. N. Barkman

This issue was recently covered in my Business Economics class at James Cook University in (what Americans would consider to be) Socialist Australia. Our lecturer quoted one economist as describing price floors (in the form of rent control) as “the best way to destroy a city, other than bombing.”

A rise in minimum wage which is binding will always result in a shortage of job supply. I think this has profound sociological (or perhaps moral) implications for the character of our young people. If it’s impractical to hire young, cheap labour, we’re in danger of developing a teen culture which is lazy anti-social…

I firmly believe that the (high) level of our minimum wage here in Australia keeps a lot of people dependent on the government because employers can’t afford to hire people at the higher wage and these are people who would be willing to work at a lower wage.

That said, I totally agree with the general observations in your post. I recently spoke to an American who seemed to equate American, Republican economic values with God’s opinion. The poor guy didn’t even know he was doing it, but you can be sure it turned me off immediately.

Bob and Pastor Barkman,

Interesting discussion.

I would like to ask about the other effect of minimum wage - the resulting increase in prices. Business stay in business by making a profit. When the cost of labor increases, the price at which they have to sell their goods or services must increase to offset the increase in labor costs. (If those prices have to increase so much that no one is willing to buy the goods at that price, they go out of business - or they outsource their labor costs to another country as Pastor Barkman mentioned.)

Many of the goods and services that employ minimum wage employees are generally producing goods and services that are disproportionately used by the very people the raising of the minimum wage is supposed to be helping.

The items that “rich people” (however we define that) buy are generally more high-tech or high-end already. The service places that “rich people” go to - the nicer dining establishments, resorts, etc., - are often already staffed by people making over the minimum wage.

It is the “cheaper” places (that people like I go to) - be it fast food, dicount stores, cheap Sav-A-Lot style grocery stores, etc. that are often employing people at minimum wage or close to it. It is these types of places that generally have a corresponding increase in prices when the minimum wage is raised and it is these places that are more often the places where the poor get their goods and services, meaning that it is not uncommon for the poor to actually be worse off when the minimum wage is increased.

Anyway, just a (hopefully) friendly counter-point.

(On a side note, in defense of Wal-Mart, I used to work at Wal-Mart and have two other immediate family members who work at Wal-Mart and I never felt that they treated me or my family members unfairly.)

Frank

Raising the minimum wage has a negative impact on employment. This has been proven repeatedly. When the latest increase took effect last year (prior to the economic collapse) teen unemployment immediately started climbing. Why? Because according to the Bureau of Labor Statistics, only 3% of the workforce earns minimum wage…and more than half of those are under age 25. Every time it is raised, people lose their jobs.

As for capitalism as a system, I believe you’re changing what you said from your post to your comment. I don’t argue that capitalism is a panacea. If your point was that it doesn’t guarantee help for the poor, I wouldn’t disagree. If you said it wasn’t a great way to help the poor (per Churchill’s comment that democracy is the worst form of government except for all the others) I could accept that.

But what you said was that it was naive to say capitalism was best…and that flies in the face of all of recorded human history. What other system offers advancement to the poor? Certainly not socialism, communism or a welfare state. Not the feudal system of the Middle Ages or dictatorship. In fact I suspect that you’ll be hard pressed to name any other economic system that allows the poor to stop being poor. Capitalism has many failings, and it may not do as good a job of “giving” to the poor as some other systems. But is that what the poor need? Isn’t it better for them to have the opportunity through hard work and perseverance to move out of poverty instead of remaining dependent?

Bob,

A few thoughts…

You say that raising the minimum wage is an application of justice. I would have to ask whose standard of justice are you using? What biblical criteria are you bringing into play to determine that wages should be externally controlled?

My view on all of this is somewhat colored by two experiences. My family and I lived below the poverty level for several years. We found that the level of minimum wage had no real correlation as to the quality of our life. That was based on what we deemed important as opposed to what society deemed important. When I re-entered the secular work force, I started at the very very bottom in a non-union facility. Over a period of nine years I ended up in a much better position financially then I would have in a union shop. I was given the freedom to exercise potential.

I would also recommend two other books which may provide some balance. Adam Shepard wrote “Scratch Beginnings” in which a man essentially documents his adventure, starting out in a homeless shelter with 25 bucks. He goes on to get a job, apartment, truck, savings, etc. It is anecdotal, as “Nickel and Dimed” was, but it shows the other side of the argument. I am especially fond of “Creating the Commonwealth: The Economic Culture of Puritan New England” by Steven Innes. He does an in-depth study correlating the Puritan work ethic as seen in Scripture, and the ongoing battle with materialism. Its probably one of the best works I’ve seen that examines the spiritual battles that exist in a prosperous environment.

Do I believe that capitalism is the answer? No… Do I believe that it God’s best for us? No.. It does allow the most opportunity in this day and age for one to use his resources in a way that glorifies God. On the other hand, it also allows one to fall into gross materialism which is one of the great sins of the church.

The answer does not come from fighting for/against systems but rather seeking to transform hearts so that they may have an eternal view of reality.

I’ll step off of my soap box now.

Garry

Hi Bob,

Great idea, I’m glad you’re interested in what college students are reading.

Another perspective you might be interested in is seeing what college students are choosing to read rather than what they’re required to read for classes. The Chronicle of Higher Education keeps track of the top 10 hard/softcover book sales at campuses across the nation — http://chronicle.com/research/bestsellers.htm

The most recent list dated May 22 (based on April sales) shows the following in top 10 order —

Twilight by Stephenie Meyer

Act Like a Lady, Think Like a Man by Steve Harvey

The Shack by William P. Young

Eclipse by Stephenie Meyer

Breaking Dawn by Stephenie Meyer

Watchmen by Alan Moore and Dave Gibbons

Snuff by Chuck Palahniuk

Unaccustomed Earth by Jhumpa Lahiri

New Moon by Stephenie Meyer

Love the One You’re With by Emily Giffin

Take care,
Eric

Bob,

Not to pile on, but I agree with just about everything you said except for the minimum wage argument. I think that’s been discussed enough so I’ll move on.

The real crux with “christian capitalism” (from my perspective as a Financial Planner) is the need vs. want, “pulling ourselves up by our bootstraps”, poor=lazy argument. All of these arguments are humanistic arguments that have found their way into the common evangelical “theology.”

God has promised to give us what we need every day. We are to take no thought (worry) for tomorrow. We are to be wise stewards of our time, talents and money, and be content in whatever state (including economic, even if it means renting a small apartment. gasp!!!) God has chosen to put us in. We are also to take care of the poor (and widows and orphans) because they are with us always. We are the tool that God has chosen to meet their needs every day! A slap on the back and a trite saying isn’t how God has called us to minister to the poor.

The prevalence of (most) consumer debt amont christians (credit cards, auto loans and even most student loans) is a clear violation of biblical financial principles. We are such “empowered” christians that we take matters into our own hands (because we “need” that flat-screen TV, new car, vacation, lawn mower, expensive degree, home). Oh that we would truly LIVE: Great is Thy faithfulness! Morning by morning new mercies I see. All I have needed Thy hand hath provided; Great is Thy faithfulness, Lord, unto me!

Ultimately you are right, a bibilical philosophy will eschew both capitalism and socialism as humanistic philosophies that are far from the best that God wants for us.

In this abominable age of Whig-industrialism, the poor are taught to either a) be content with nothing, or b) to achieve riches via ambition (greed.) Meanwhile, our insistence on a classless society means the poor can demand nothing of the wealthy, who thus enjoy all the benefits of status without the obligations.

The orthodox solution is to submit one’s riches and secular power to the authority of the church. I know from business school that’s not “efficient,” but it’s charitable and right to do.

Bob,

If the question is, “Is Capitalism always just, and eliminates greed and poverty?”, the answer is obviously “No”. But neither does Socialism, or any other economic system. Why would we expect it to? We live in a sinful, fallen world.

To fault Capitalism because of societal failures is akin to faulting the church because it’s not perfect. Of course it’s not, but that doesn’t mean it’s not God’s designed institution for His people in this fallen world.

The question should be, “Which economic system produces the best results, when compared to other systems?” That question seems to aways yield the same answer, namely Capitalism. Capitalism never eliminates greed, exploitation, or poverty. Capitalism does not eliminate self-interest. But it seems to use self-interest to provide the most economic advantages for the most people. Does it yield equal wealth for everyone? No. Nor is it expected to. But it does a better job of providing for everyone than other systems. When you compare the poor in Capitalistic countries with the rich in the same country, you find great disparity. When you compare the poor in Capitalistic countries with the poor in socialist countries, you find the Capitalistic poor are better off. Only where Socialism follows Capitalism, and is able to feed off the wealth created by Capitalism to distribute to the poor, does Socialsim appear to be superiro. Until the wealth created by Capitalism is used up. Then Socialism reduces everyone to a lower economic level, except the politicians who control the levers of Socialsim. They become the new wealthy class, and feed off of others. The greed is just transferred from Capitalists to Socialists.

Capitalism works best where Christian influence is strong, thus curbing some of the excesses of greed and selfishness. But where Captisliasm fails to produce a “Christian” result, the real problem is sin, not Capitalism. Socialsim claims to be more compassionate toward the poor, but ends up leaving them worse than before, because the system doesn’t work very well. When you eliminate the incentive to earn, produce, and gain wealth, everyone is worse off.

Have you forgotten the Socialistic experiement in New England when the Pilgrims tried it? It didn’t work, even in a strong Christian context. When they reverted to Capitalism, they began to produce enough food for all. Under Socialsim, they starved.

It all keeps coming back to the previously stated concept, Capitalism is not such a great system, until compared with everything else.

Warm regards,
G. N. Barkman

Hey all,

I’m not dodging the conversation! I just suddenly got swamped. Your arguments are good and I concede many things, but I want to come back and answer some of the challenges and questions as soon as I can. I thoroughly enjoy the input.

Bob

Bob,
You know how that sense of ‘here we go again’ hits you when a roll-your-own-at-home theologian (to borrow a phrase)comes stumbling on to an intellectual battlefield looking for a fight over territory already staked out and well-fought over? DS:) To confront capitalism as a system from a Christian perspective with Ehrenreich and Hannity (which I recognize may not be precisely how you would describe what you were doing) without acknowledging the contentions of Smith, von Mises, Friedman, Sowell, and yes, the Apostle Paul evokes the same reaction from me and, apparently, others. I suggest it might be like trying to develop a position on Calvinism after engrossing yourself in a debate between the 20-year old fundamentalist bible college student who just discovered Romans 9 and tore out the rest of his Bible and DS. I recommend developing a position from a Christian perspective on capitalism by interacting with Basic Economics by Sowell as a starting point. A shortcut to developing this Christian perspective might be Money, Greed, and God by Jay W. Richards(admittedly in favor of capitalism). When this intellectual position is developed (agree or disagree), then comments flowing from it on current Republican policies or politicians, the minimum wage, or current events might find a more receptive audience. Now, maybe you already have this economic “systematic theology” in place and it just disagrees with mine, but that wasn’t obvious from your post. I propose that you will find a deep compatibility between capitalism as articulated by these advocates and a biblical view of human nature, human dignity, morality, poverty, and money.

I actually read Richards last week and honestly didn’t see much that was anything but a rehashing of things I’ve heard all my life. And, Everybody! I already conceded in my original post that capitalism is the better system. Now if I hadn’t have hijacked my own post with the “minimum wage” statement the conversation would have probably gone the direction I was intending. I did it to myself, knowing that line was particularly provocative (and experienced enough in blogdom to know that provocative helps stir up the conversation). Knowing that I am outgunned in this thread on the “wage” discussion (and economically on the wrong side), I still intend to regroup and redirect with some concessions to make what I think is a point altogether missed by most Christian Capitalists, a point that Chris Bixby in the above thread seems to be discerning in my original post even though he also distances himself from my ‘minimum wage’ comment.

In the meantime, I hear you loud and clear: I’m an idiot that doesn’t know what I’m talking about.

I already knew that. Tell us something we don’t know.

Thanks for the clarification on your underlying point, Bob. I agree that consumerism is not a Christian virtue, and if that’s the way you are going, I’m sure I will appreciate your comments. Mere Comments by chance has a post on consumerism and capitalism today, and the discussion following takes the shape you intended for our tête-à-tête? (partly my fault it didn’t)

Thanks for the review! I’ll have to look for this book. It sounds a little like David Shipley’s _The Working Poor in America_—a book that really upset my outlook.

Kudos for reading stuff outside “our” world! Great idea! My pastor does the same, and I think it gives him a lot more credibility. He knows where is congregants are coming from and is familiar with the world of ideas they come in contact with every day. It enables him to help us interact honestly and thoughtfully with what’s “out there” while constantly reexamining our own views and assumptions.