Is Springsteen Right on Income Inequality?

by Hugh Whelchel
All-American rocker Bruce Springsteen took to the pages of Rolling Stone magazine this past spring to lament the existence of income inequality in our country today: “You cannot have a social contract with the enormous income disparity — you’re going to slice the country down the middle. It’s not going to hold.”

Is Springsteen’s concern about income inequality shared by most Americans? If you were to gauge your response by viewing the media coverage of the Occupy Wall Street campaign, then your answer would have to be yes.

Pollsters find a wide range of viewpoints. Gallup found that only 2 percent of Americans find the gap between the rich and the poor to be the most worrisome aspect of today’s economy. However, the Public Religion Research Institute found that more than six in ten Americans think that “one of the biggest problems in this country is that more and more wealth is held by just a few people.”

When talking to Christians about the issue, many don’t know what to think or what the Bible says about the issue. Is it a natural part of life? Is it a problem in America? Is it unfair or against Biblical teachings?

Much of this confusion within Christian circles is a result of economic illiteracy and simply being unfamiliar with Biblical teachings on the topic.

Here at the Institute for Faith, Work & Economics, we recently released a research paper that provided an economic and a Biblical explanation of why income inequality exists. My colleague Dr. Anne Bradley made the following key points in her paper:

1. Diversity is a Biblical premise of Creation. We are born with different gifts.
Scripture tells us that we are created in God’s image (Genesis 1:26-27) and that implies uniqueness. God is unique—there is only one God. Man too is unique both physically and spiritually. Each person on this earth has a unique genetic code, or DNA, that distinguishes us. From that code we each have a unique voice, fingerprint, personality, etc., all of which makes us matchless. Diversity is literally woven into the very fabric of creation.

In addition to our specific genetic proclivities we are all created with unique sets of gifts (1 Corinthians 12:4-11). Tim Tebow was created uniquely to become a quarterback just as Billy Graham was created uniquely to become a public evangelist. They both can and arguably have furthered the Kingdom of God through their very different gifts (both physical and spiritual) and their different application of those gifts.

2. By focusing on our gifts we can unleash our comparative advantage and bring value to the marketplace by serving others.
Economists refer to our uniqueness as comparative advantage. A good example of this is in Jesus’ parable of the talents in which a rich man gives his slaves different amounts of money, according to their ability. (Matthew 25:14-30).

If one individual or company can produce a good or service at a lower cost, then they are better off specializing in the production of that good/service and trading with others. Specialization frees up our time to focus in on using our gifts productively and that freed time is an opportunity to further advance the Kingdom of God.

3. In a free society, absent cronyism, disparity of wages is not a sign of injustice.
Because gifts are different and value in the market place is subjective, incomes will be different. They are different because we are created differently. Income inequality is then inseparable from a fallen world in which scarcity abounds. It’s a fact of economic life and economics pervades all of our life choices.

4. If we care (like Springsteen) about a society that reduces poverty and assists the poor, we should be concerned not about income inequality but the relative prosperity of those at the bottom and their income mobility.
In a market economy, most people start out at a lower income bracket and move to higher incomes. As they gain skills, knowledge, experience and awareness of what they are good at, they earn more income over time. All of this is based on people using their gifts and talents to serve others. But is this really happening?

The Congressional Budget Office reports that from 1979 to 2007 real (inflation-adjusted) average household income grew by 62 percent. This means that the average household experienced economic growth and that most US citizens are quantitatively better off than they were in 1979. Even though the rate of growth across quintiles is not the same, all quintiles experienced growth.

5. An opportunity society is the best way to unleash the creativity and dignity with which we are created and serve others with our gifts.
A system of free-market (voluntary) exchange supported by well-defined private property rights protected under the rule of law is the only empirically-tested way to protect human dignity and unleash the creativity with which we are created, all for the purpose of serving the common good. That is also the best way to foster income mobility.

So, Mr. Springsteen, let’s celebrate our diversity. We’re not all musicians, nor should we be. As a result, income inequality is a natural part of the natural human condition and is not necessarily unjust. From a Christian viewpoint, we are created uniquely and that means that there is no universal Biblical standard for income equality.

That said, we as Christians are called to seek justice and to care for the poor. We must be at the forefront of this discussion on income inequality – understanding where it is natural, and challenging the status quo where it is unjust. Corruption and injustice that cause poverty must be eradicated.

The main takeaway here is that Christians must be leaders in cultivating and protecting an economic environment that creates opportunity for those in poverty to enjoy upward mobility through the dignity of work.

Hugh Whelchel is executive director of Institute for Faith, Work & Economics (www.tifwe.org) and author of How Then Should We Work? Rediscovering the Biblical Doctrine of Work.

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12 Comments

  1. Excellent! Every Charity’s Executive Director should read and adopt this viewpoint. Upward mobility through work! Imagine the results related to our current economic woes where we live in a country that almost half it’s citizens don’t pat taxes and the government spends 3-4 trillion dollars more per year than it takes in revenues from taxes !

  2. This article is completely missing the point though. Sure, we can talk about how there is diversity in God-given gifts, and how everyone has their own calling- yes, this is a good thing. But I believe you find yourself on increasingly unstable ground when you try to take the facts that God gave people diverse talents, and that a capitalist free market places different values on those talents, and argue that this means wage inequality is inherent in the created order (or is an unavoidable result of the fall.) The question that Mr. Springsteen has already answered, and that we need to be considering, is whether or not the income gap is a good thing, or something that Christians in policy-making positions need to be working against. The simple fact is that Jesus had very few positive things to say to the rich. The American marriage of Christianity and Capitalism has made us very adept at explaining away the fact that “it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God.”

  3. Well said. And because it is so, it raises questions. Among others, that occur:

    Is a tax code laden with exceptions (loopholes) gouged out by the(presumably uniquely gifted) not-poor “corrupt”? “unjust”?

    How does our Christianity work for the poor in the area of public policy beyond private charity and government welfare?

  4. Mr. Welchel,

    After this article, we the readers are not sure if you think Springsteen is right or not. On one hand, you talk a lot about the “OUGHT” of creational ordinances in points 1, 2, 3, and 5. However, it seems there is not enough emphasis on the “IS” of the Fall – though you hint at it in point #3 (when you say that disparity of wages is not a sign of injustice, “absent cronyism”) and in point #4, about the idea that income inequality is not the real problem but rather “income mobility.”

    However, in point #4, the link you send us to for the CBO Report clearly states, “After-tax income for the highest-income households grew more than it did for any other group.” This is a mark not of income mobility but of income immobility. To say dismissively that “even though the rate of growth across quintiles is not the same, all quintiles experienced growth” ignores the astounding inequality that many economists are concerned about – that the top 1 percent of households increased by 275 percent while the 18 percent for the bottom increased by a mere 20 percent. If we saw income mobility in these numbers, we’d see the distribution of income become MORE equal over time, since those who are rich have nowhere to go but down, while those who are poor have nowhere to go but up. However, CNN Money reports that according to the Pew Economic Mobility Project, “Most Americans make more than their parents did, but that doesn’t mean they’re all moving up the economic ladder. Some 84% of Americans have higher family incomes than their parents had at the same age and 93% of those who grew up in the poorest fifth of the income ladder exceed their parents’ family income as adults. But out-earning their parents hasn’t helped many of them climb out of poverty, as many poor American families remain stuck at the bottom of the income barrel. Some 43% remain in the lowest quintile. ‘It calls into question the quality of the opportunity Americans believe exists in the United States,’ said Erin Currier, project manager of the Pew Economic Mobility Project.” (http://money.cnn.com/2012/07/09/news/economy/wealth-income-inequality/index.htm)

    Nowhere in this article do you address economic policy that may purposely keep the rich wealthy while harming the poor’s opportunity for moving up the economic ladder. The “Is” of the Fall has always given advantage to those in economic power over those who are not. Economic policy that does that in America is biblically unjust. To dismiss the CBO’s report by pointing just at the trend upwards in each quintile seems to me to not deal with the central issue of income inequality: How and why it happens.

    According to The Economist, American “rates of social mobility are unlikely to grow. Inequality, however, may widen even further.” (http://www.economist.com/node/15908469).

  5. Newcomer to content and dialogue on this site. Recommended by long time subscriber, friend. I was impressed by the “changing the frame” approach to problem solving/reflection with a “lived theology” in Christ. Yet, my first sojourn into offering a comment was apparently “moderated” out. Interesting.

  6. I think I have the biggest problem with point 4. Does the CBO study take into account the increase in the number of hours worked to earn that 62% income? How about the increase in the number of dual income families? As was pointed out, the term average means some people got more and some less. Other studies point out that increasingly, the rich use their wealth to make sure that their children have the same advantages in education and income which the poor can’t get. As our society falls apart with more single poor parents rearing poor children in poor schools, the disparity between rich and poor will get worse and no amount of gifts and hard work will overcome this.

  7. I am a different Sam B than the one who commented earlier, but I certainly agree generally with the points the first Sam B raised. I will try to add briefly to those statements by discussing one part of this article in particular, which is as follows:

    “A system of free-market (voluntary) exchange supported by well-defined private property rights protected under the rule of law is the only empirically-tested way to protect human dignity and unleash the creativity with which we are created, all for the purpose of serving the common good. That is also the best way to foster income mobility.”

    I first question the phrase “empirically-tested.” The way it is used in this article makes it seem as if the author really means, “well, it sure looks like those countries that base their economies on capitalism and have lower barriers to business, and have dominated world commerce since WWII have less poor people.” This characterization seems short-cited and perhaps even a bad starting point, particularly in a discussion concerning the role of the Christian faith community in dealing with economic issues.

    The second phrase I take issue with surrounds “empirically-tested” and claims that this free market system protects human dignity and “unleash[es] the creativity with which we are created.” At this point in the article, the only example the author has provided is the economy found in the United States. The author has then added a caveat, i.e., “absent cronyism.” Yet the author never addresses that cronyism and hubris added considerably to, not only the greatest wealth-creation this world has ever seen (pre-2008), but also one of the greatest retractions in wealth (post-2008). How do we separate this recent well-documented phenomena from the analysis? By citing the United States as an example, what unleashed creativity is the author discussing? New untested financial algorithms? “Creativity” is not, by nature, positive. Are there not very “creative” ways to kill? We people can do our very best to create, and create well, but we still are not always doing God’s work, merely by being creative. I would hate to attribute good human creativity to an extremely faulty human creation like the market economy we experience now.

    The world is changing, and if the Christian faith community is to lead in any way, we should not be lulled into acceptance of an old financial order. Many of the brightest minds in the world are working around the clock on solving the Euro crisis, and you can be assured that they are not relying on an economic order based on a fuzzy understanding of untested financial instruments.

    Although the author encourages us to question income inequality where it is unjust and understand when it is natural, he provides no concrete example of a natural occurrence of income inequality. Income, in many ways, is derived from and is a construct of what a society is willing to pay for a particular good or service. God did not provide a monetary value to particular human activities, rather we did this, and continue to do this. Can we determine what is natural inequality under conditions where it is clear our system of valuing certain goods and services is wildly flawed?

    In closing, merely saying “diversity is a Biblical premise of creation” is an unacceptable starting point for a discussion that should be taken seriously by those in the institutions of finance and government. This is particularly inadequate when the pain of poverty is described as “diversity.”

  8. The reality of poverty is that we all need to live within our means. IMO the church should be sensitive to the needs of the poor and provide opportunities to minister and care for them. Some people make stupid decisions though which is the reason they are poor and will remain poor. Others have bad luck through no fault of their own.

    To castigate the rich and take away their wealth because they have it does not make the poor less poor. It simply gives the poor more money to waste.

    An interesting survey was done asking people what level of income would help them take care of themselves. Both the rich and the poor stated that if they had 10% more money, they would be satisfied…;-/

  9. Thank you all for your comments. I look forward to conversing with you about these issues. There is a lot to respond to, and while I may not get to all of it, I encourage you to visit IFWE’s blog at blog.tifwe.org, where we’ll be exploring these matters over the coming weeks.

    I did want to offer a theological perspective on rich and poor. It is true that Scripture has very harsh things to say about the wealthy. However, what Scripture is condemning is not wealth itself, but how wealth is acquired and used.

    There are many examples in the Bible of the righteous rich, including Abraham, Isaac, Jacob, Joseph, Job, Joseph of Arimathea, Lydia (who funded much of Paul’s ministry), and Dorcas (who often helped the poor).

    To set the record straight: I do disagree with Bruce Springsteen’s assertion that income disparity will tear our country down the middle.

    I have argued that income disparity is a result of the way the world was created, i.e., with great diversity. Jesus Himself tells us in the parable of the talents that each of the servants was given different amounts of money, according to their ability (Matthew 25:14-30). Income disparity in itself is not sinful.

    That being said, I would agree with many of the comments pointing out that there is way too much bad public policy, injustice, and cronyism in our country, all of which has exacerbated the problem. There are far too many examples of the unrighteous rich who make their fortunes through unjust means at the expense of the poor and the middle class.

    What I am not saying is that the rich aren’t without obligations to the poor. We must remember we live in a fallen world and there are many in our country, who, for reasons beyond their control – sickness, natural disaster, injustice – find themselves in poverty. The Bible instructs us as Christians to “…as we have the opportunity, let us do good to all people.”

    The real question is how do we best “do good” for those who have fallen on hard times both individually and as a society. For more on this topic, please see a fuller explanation of poverty issues in our series on “Poverty and the Church.”

    There are a lot of comments to cover, and I am inviting my colleague, Dr. Anne Bradley, to respond to your questions about wages and the CBO report that we cite in this article.

  10. I would also like to thank everyone for their comments.

    I’ll dive right in and offer an answer regarding the difference between ‘just’ and ‘unjust’ income inequality. First, allow me to explain how value is assigned in a market economy.

    Economists call this concept ‘subjective value.’ Consumers value certain goods and services over others. For example, the iPhone is wildly popular compared to the Droid. They’re similar products, but one is outselling the other. Is that unjust? Is that unChristian? I would say no. Consumers simply see higher value in the iPhone.

    Because God created us differently, we have different preferences. Our preferences and needs are different because we are inherently different. In a market economy, this translates into valuing things differently.

    Value is assigned separately across consumers, and income received by successful entrepreneurs will reflect this difference in assigned value. The only way to maintain a successful profit margin as a company is to offer a better product at a lower price than your competition.

    Given the differences in value consumers assign to a company’s good or service, income among competing entrepreneurs will be unequal. This inequality is not necessarily unjust, as long as political power through coercion was not used to limit one’s competition.

    As long as companies and entrepreneurs are not seeking favors, special loans, favors, and subsidies at others’ expense, then income earned through providing products and services that are not inherently sinful is just.

    God never promised us wild financial success. Some may be blessed in that regard, but Scripture is clear that those who have that success have much greater responsibilities to provide and care for the needy. Markets aren’t perfect, but they are the best known way to harness the talent God has given each of us to enable us to serve others through our work.

    These are some of the issues IFWE is concerned with understanding, and helping Christians grasp. That is why we engage in scholarly research that starts with Scripture and employs an economic way of thinking. Our view is that this is the mos reliable way to understand and promote human flourishing.

  11. Anne Bradley,
    I understand and fully agree with what you say about the market and how people purchase items in which they see higher value. No argument there.

    But what does that really have to do with the issue that is raised by this article?

    Income inequality is not caused by a healthy market. It is caused by people who are fallen and in their depravity justify the economic policies that favor them as “good for the market.”

    You say that “as long as companies and entrepreneurs are not seeking favors, special loans, favors, and subsidies at others’ expense, then income earned through providing products and services that are not inherently sinful is just.” I know of nobody that would argue with that. We all agree that if we lived in a world of no sin that earning income would be just.

    The problem is that this is a world in which those in economic power seek to keep that power by unjust means (and even believe that they are being just in doing so, since they believe that income inequality is not inherently unjust.)

    Once again (as I said above), there is a lot of thought given by you and your colleague about the “ought” of income inequality (how things “ought to be”), but not nearly enough thought on the “is” of how the Fall has twisted that in terribly unjust ways.

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