Wealth Archives - Bob on Books

To be called “shrewd” is often a back-handed compliment. Images of used car dealers in plaid jackets or oily snake oil salesmen run through my mind. One definition I came across said “given to wily and artful ways or dealing.” One often gets the idea that shrewdness involves something a bit shady, but clever.

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This past Sunday, Rich preached on the parable of the shrewd manager in Luke 16:1-15. He finds out that he’s going to lose his job because he wasted the master’s possessions. So, to have some place to go after he gets fired, he calls the master’s debtors in and reduces their debts from 20 to 50 percent. When the master finds out, he commends him as a shrewd operator. Jesus in turn says worldly guys like this are shrewder than the people of light when it comes to using money (verse 8).

So is Jesus saying its OK to cut corners to make a little extra? No, the point is that this guy in his own way used money to make friends. Rich talked about the idea that for Christians, are we as good at faithfully using money for the blessing of others as the shrewd manager was in using money to make friends. The truth is we can only use money to serve God or be mastered by money where it becomes our god (verse 13).

So often, we avoid talking about money in church because such talk is either a prelude to a guilt trip or to an appeal to put more in the offering plate. In the midst of all that, it seems we miss the incredible opportunity for joy in the use of whatever money we have.

Rich talked about the creative people who figure out not only how to pay their bills but delight in finding ways to use their money to care for others. What is interesting to me is that these are the happiest people I know. They don’t always have a pile of money. But they love having an extra person at the table, or surprising someone with a gift they really need. They always seem to have enough to give. This is when shrewd is good.

I’ve known some people who have real gifts, or just plain opportunity to make a pile of money. They are entrepreneurs. One of the coolest things I’ve seen are some people I’ve known like this who get really excited by figuring out ways to use this money, or even multiply this money through the investment of others in advancing the kingdom of Jesus. This is when shrewd is good.

One friend has created a business with the help of investors that employs ex-prisoners in janitorial jobs in office buildings, giving them skills, a work record, and, if they are receptive, the gospel. Others have invested in micro-lending that enables people to expand businesses, and is a key to helping women escape the threats of violence and trafficking. Another believing friend uses investment skills and Christian principles to help wealthy clients develop family “mission statements” about the use of their wealth and plans for how wealth will be intelligently passed along from one generation to the next without spoiling the children rotten. This is when shrewd is good.

Rich asked us several questions at the end including the challenge to ask someone else to tell us, “how concerned with money do you think I am?” One that I might add is “how do you think about money?” Are you thinking about how much of it you have and how you can get more, or are you thinking about ways that you can use what you have so that someone else can experience the goodness of God’s kingdom? I’m not sure we can get away from thinking about money in this life. It seems to me that the real question is whether we are thinking of money as on trust to us from God and looking for ways to use it for the good of people and the glory of God. This is when shrewd is good.

Capital in the Twenty-First Century by Thomas Piketty
My rating: 4 of 5 stars

I wonder how many people purchased this “bestseller” and laid it down after 50 or 100 pages. It is a daunting but doable challenge to work through the 577 pages of text as Thomas Piketty gives us a carefully crafted exposition of the nature of capital and why the growth of capital in relation to income is something that deserves the careful attention of our citizens as well as policy makers on a national and international level.

I actually found that Piketty took the arcane and often statistically laden subject of economics and has given us a tour de force explanation based on the compilation of two centuries of data from the major western countries, including data from 20 or more countries overall.

The major result of his study is to show that capital (which consists of most non-labor income sources of wealth such as real estate, stocks, bonds, bank deposits and the physical plant and machinery of companies, is growing at a far faster rate that income from labor, and that there is a concentration of capital wealth among the top ten percent (even more among the top one percent or .1 percent) of the population and that because of the disproportionate growth of capital over income from labor, this inequality of capital wealth will become even more concentrated in the twenty-first century.

Part One of the book explores the nature of income and capital growth, and how these are measured. Part Two draws on the massive data set Piketty and his associates have developed to trace the ratios of capital to income from the late eighteenth century (in the case of France) to the present. In general, with variations from country to country, he notes extremely high concentrations of wealth and a high capital to income ratio up to the first world war, a collapse of this wealth between the two wars (1915-1945), a golden era of greater equality from 1950 to 1980 (coinciding in the US with high progressive income taxes), and increasing capital to income ratios from 1980 to the present as well as growing disparities of wealth during this period.

Part Three explores the structures of inequality, looking at exorbitant growth in compensation of top executives in relation to other wage earners for no other apparent reason that the cutting of income taxes in the top brackets (no evidence being found for increased productivity of these executives) and the dynamics of capital accumulation and inheritance. All this is a complex argument that can be summed up with the idea of the rich getting richer, the middle class stagnating and the poor getting increasingly small pieces of the pie. What I wish were clearer is whether Piketty sees living standards for the poor and middle class declining as well as growing disparities, which does create a potentially volatile social situation. If everyone is doing better, by contrast, it would seem that they may not resent, or even be that conscious of increasing disparities in the wealth of the super-rich. In other words, do growing wealth disparities necessarily imply declining standards of living for the poor and middle class or simply less of a share of a growing wealth pot?

Piketty argues in Part Four that the needed remedy for the growth of capital is progressive taxes on incomes that allow the rich to acquire capital, and globally enforced taxes on capital to check the growth of capital. As I read this section, I thought it made mathematical sense and perhaps even sense as a social policy, but surveying the political realities of the current scene, particularly in the U.S. I thought, “ain’t gonna happen”. My hunch is that the only ways we might see these inequities decrease would be through cataclysmic events like the two world wars with an economic collapse in between. One could also hope for an “enlightened capitalism” where the richest people voluntarily deploy capital for the wider good, perhaps as the Gates Foundation and Warren Buffett have done.

I’m not convinced that the rich will accept either greater taxation or voluntary de-accumulation of capital, which then sets us on the course of some form of social cataclysm. It is the unspoken possibility of such occurrence that I think Piketty glimpses and seeks to avoid. But I think he assumes an enlightenment of the human heart that I find more dubious. Nevertheless, this is an important work for understanding the dynamics of capital accumulation and how it leads to inequalities that belie our democratic values. It raises the question of what kind of nation and world do we really want?

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