#95 Paying People Not to Work

The Christian Economist

#95 Paying People Not to Work

Paying people not to work is not Biblical nor is it economically sustainable.
The Good Samaritan story tells us how to care for those who can’t care for themselves. 

 

“They pretend to pay us and we pretend to work,” is a jocular phrase I picked up in Russia.  But at least both parties were pretending, and at least it was under-developed Russia.  Today, in the United States, neither party is pretending.  People are being paid not to work.  

In 1998, I was leading a seminar for Certified Public Accountants in Pittsburg, and the news that day was that the Pittsburg Penguins of the National Hockey League had declared bankruptcy.  “How did this happen?” I asked the CPA’s.  There was no answer for a long time, then one of the accountants dead-panned, “Expenses exceeded revenues in the long run.”  

In Russia, expenses exceeded revenues in the long run and the country essentially went bankrupt in the same year, 1998.  How long can the United States afford to pay people not to work?  Seems like we’re testing that idea. 

Rational Economic Policies

JPMorgan Chase researchers reported that because of the supplemental $300 a week in unemployment benefits, 48% of American workers made at least as much in unemployment benefits during the pandemic as they did while working.

Nicholas Horton, writing in the Wall Street Journal this week, says that “At the start of May, the number of people collecting unemployment in Arkansas was still nearly twice as high as it was before the pandemic started—yet at the same time, the state’s employers had a record 80,000 job openings.”  These reports have been heard around the country.  Then, of course, when Arkansas Governor Asa Hutchinson opted out of the extra $300 in weekly unemployment benefits, people went back to work.  Horton goes on to write, “People can do the math. The prospect of making more money by staying home than going to work was an offer many felt they couldn’t refuse. That’s why ending the unemployment bonus has done a world of good.”  Let’s dissect that statement, “…ending unemployment has done a world of good.”  You see, paying people not to work is not a good idea, either in Christian values nor economic values. 

As the Christian Economist, I sometimes get caught between Christian values, which are concerned about the means, and Economic values, which concentrate on the ends.  $300 in extra unemployment benefits loses on both counts: It’s not Biblical and it’s not economically wise. 

But those who supply labor are wise, and they are rational economic responders to their environment.  They are not even pretending to work, and they are being paid.  I at least honor the Russian Soviets who sustained the charade.

Mr. Horton reports that in Arkansas, after the $300 went away, people went back to work at twice the rate they did when the $300 was being paid.  This is not difficult economic theory.  But it does seem hard for the governors about half of the states who kept paying the $300.  Mr. Horton again, “Every person who goes from unemployment to a job is on a better path in life.”  That’s a pretty judgmental statement to make these days.  Judging that work is good can get a woke executive or politician in trouble. 

Work is Good

That’s what Sergiy Saydometov and I found in our recent book Biblical Economic Policy.   Work is good is one of the ten Biblical Commandments to work.  Mr. Horton is correct when he states that it improves the life path for individuals.  

In Genesis 1:1, God is working, “In the beginning, God created the heavens and the earth.”  It’s a good assumption then, that we should work. 

Work is a part of God’s blessing on us.  It’s not a part of the Fall.  Adam and Eve had work to do in the garden before the fall: Naming the animals, and tending the garden.  Work changed after the Fall, as did everything else.  It became burdensome, but it’s still a part of creation, not the fall.  There’s more about this in my little book Economics and the Christian Worldview.    

Jay Richards has written one of the best books in the Christian Economics area, titled Money, Greed and God.  He closes the book with ten ways to alleviate poverty, and of course, among them is: Work hard.  

Work is worship.  You’ve noticed the words are almost the same.  For the Christian, life without work is meaningless.  If you’re doing nothing to improve the conditions of your fellow humans, what’s your purpose in life?

John Calvin’s claim on Colossians 3:23 “Whatever you do, work at it as unto the Lord.”  Notice that the verb changes from “do” early in the command to “work,” later in the command.  This lead to what Max Weber called the Protestant Work Ethic and the Spirit of Capitalism.  Work has made developed countries rich.  But that looks only at the outcome.  We also consider the input.  We believe God commands us to work, based on the Genesis 1:28 mandate, “Be fruitful and multiply.”  We exercise our stewardship particularly in work. The fruits of our work are good and services, which enable man to live in a way which respects his dignity.  So work is an extension of our Christian belief system.  

It gets even more serious, in the first century, when people were just waiting around for the second coming of Christ, the Apostle Paul told the people in Thessalonica, “The one who is unwilling to work shall not eat.”  

In the movie Return to Me, Minnie Driver plays the niece to Carroll O’Connor’s character. As he is cleaning up the bar one night, she asks, “Uncle, can I help you clean up?” He responds in his character’s Irish brogue: “Oh no, me darlin’. I’m blessed by me work.” God invited us into his work. Amazing. He is sovereign. He could do it on his own. For some mystical reason, he invited us along on his great adventure: to help him redeem the world. What an invitation! James Davison Hunter, in To Change the World, says we are “enjoined to participate . . . in the creative and renewing work of world-making and remaking.”

Oh, but don’t take this too far.  As I point out in Economics and the Christian Worldview, most religions believe we behave to be saved.  Christians believe we are saved to behave.  Don’t get the causality backwards. 

The Government Did Something Good

I commented a few moments ago that ending the extra unemployment pay was good.  Isn’t that interesting, the government finally did something good.  What did they do?  Stop what they were doing!!  There is a lot to be learned from this, but let’s move on.  

Casey Mulligan and Stephen Moore, authored an aarticle in the Wall Street Journal last December titled, “Unemployment Bonus Proves Its Harm.”  Their findings would not surprise my sophomores at Dallas Baptist University.  The authors reported that Bureau of Labor Statistics data show that from May through July of 2020—when unemployment benefits were high—job openings surged.  Then when the bonus was cut in half from $600 to $300, people went back to work.  

Our Macro class starts at 8:00 AM, so some college students find it hard to make it on time.  A few times each semester, I lock the door at 8:00 and post a sign indicating the door will open in a few minutes.  The on-time students are given a little exercise that earns them a couple bonus points.  It’s a small thing, but at least it puts the incentive in the right direction.  If a government bureaucrat ran my class, she would lock the door and reward the late students.  That would not create a good learning environment. 

And, thus, Misters Mulligan and Moore are correct in their simple analysis, paying people not to work is harmful: To individuals and to the nation’s economy as a whole.   

There’s no Biblical role for the government in paying unemployment benefits.  I know, that shocks some of you, and you’re asking, “Who should pay it?”  If you read the Good Samaritan Story just casually, you will see that people who can’t care for themselves should be cared for by individuals.  There’s more about that in podcast #50 titled The Capitalist Good Samaritan.  And many times, throughout the scriptures, churches are commanded to care for widows, orphans and immigrants, because in the first century, those groups didn’t own land and thus could not provide for themselves.  The church was commanded to take care of them, and there were pretty specific rules about how to do it.  I’ll let you read that on your own. 

Ginger and I had a couple of personal experiences relative to unemployment bonuses just last month.  We visited with five family members in Seattle, where a community of non-working people has developed.  The family we were visiting hosted them on their church grounds for a week and the group spent a week on the campus of a Christian University the family is affiliated with.  When Ginger asked about the community the room lit up with complaints about how lazy the members were.  It was so clear: The homeless group -at least in this instance – had made a choice to not work and this group, think about it, five committed Christians who had helped them, thought they were lazy ingrates.   

Then, leaving Seattle, our fully loaded plane had to wait about an hour to depart the gate because the airport couldn’t hire people to drive the push-back trucks.  How many people on the plane, knew that they couldn’t hire people because they were in one of those Democrat-run states that was paying the extra $300 unemployment bonus?  An economist would be in his airplane seat, calculating the lost labor of the 170 people on the plane.  That’s just one plane-load of people.  Think about how that effect gets multiplied over the entire economy of that state, and the other 25 states paying the unemployment bonus.   

Unemployment Benefits Forever?

That’s the frightening title of an article by the editorial board of the Wall Street Journal last week.  They report that the Treasury department is suggesting that states continue the incentives not to work.  Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh, in suggesting some states continue the extra unemployment bonus, implicitly acknowledge that unemployment continues to run far higher in states run by Democrats. Unemployment nationwide fell to 5.4% in July, but it was above 7% in seven states with Democrat governors, and below even pre-pandemic levels in states run by Republican governors, who refused the extra unemployment bonus.  Again, this does not surprise my sophomores.  The WSJ editorial board ends their article by predicting that “Many Democratic states are flush with cash, so some states may take that bad advice that would harm their businesses and slow their pandemic recoveries.”

I unpack this economically unsustainable idea in more detail in podcast #80 Incentivizing Sloth.  

I’m running out of time, and I have not even mentioned one of the most famous statements in economics, “There is no free lunch.”  Milton Friedman made it into a book.  An entire podcast could be dedicated to examining the negative effect all these payments will have on the productive side of the economy that supplies the extra $300 a week.  For now, let me summarize by stating “Socialists are great at demand but lousy at supply.”  

Frederick Hayek – yes, that guy – wrote about this years ago.  He said that emergency powers during something like wartime are one thing because a war has a specific end.  But emergencies that must be declared over by those who wield power on the basis of said emergencies were a threat to freedom.  Think about it: Paying $300 in extra unemployment benefits is a threat to freedom, according to one of the greatest economists of the Austrian school.  I doubt if the Democrat bureaucrats running the US government have been reading Hayek during the pandemic.  

This harkens us back to the Universal Basic Income called for many years ago, perhaps most clearly by Mark Zuckerburg who was giving the 2017 graduation address at Harvard.  Think about it: If Harvard had been granting Universal Basic Grades for 25 years, their graduates would be stupid and would underperform in the marketplace.  Their reputation would be so bad that the people who listened to Zuck’s speech would chose NOT to attend Harvard, and they wouldn’t be in the chairs to applaud his moronic idea.

Some are quick to point out that one of our famous economists, Milton Friedman, called for something like a Universal Basic Income.  Yes, he did.  But his idea was to scrap all the existing welfare programs and simply give the money to the recipients.  His idea is consistent with the admiration he had for the market.  He wanted even those consuming from welfare programs to contribute to the market.  That’s not how UBI is seen now.  It’s seen as an addition to existing programs.  You get Friedman’s idea?  He so honored, what we Christians would call “The Image of God” in his fellow humans, that he wanted them to make the market decision about what to do with the welfare money.  Hold on, I know, Friedman was an atheist, so he would not see his fellow humans as being made in the image of God, but that’s his error, not mine.  

 

Read along with The Christian Economist:

Biblical Economic Policy 

Economics and the Christian Worldview 

Money, Greed, and God 10th Anniversary Edition: The Christian Case for Free Enterprise 

The Protestant Ethic and the Spirit of Capitalism (Economy Editions) 

To Change the World 

 

Watch the full episode here