PLNU News

30
Mar

Contribution for a guest commentary series entitled “Radical Economics.”

 

by Rob Gailey


I recently attended one night of a several-weeks seminar on getting your family’s finances in better order. I am interested in this topic, in part, because I believe our PLNU community needs more opportunities to discuss personal financial management. Too many students are unable to pursue specific vocations because of the debt load they acquire while getting the education they need to do their jobs well. The seminar I attended did a wonderful job of describing the debilitating effects of living with too much debt. It contrasted the restrictions placed on people too heavily in debt with those who had found financial freedom through disciplined savings and adequate investment in retirement accounts. While I appreciated the session, there was one area of the presentation that caused me to pause. In discussing retirement accounts, the presenter used a rate of return of 12% per year as a decent expectation to calculate as a return on retirement funds over the course of a lifetime.

 

 

At the age of 11, I remember a trip to the bank when I first realized the power and value of compound interest. By keeping my money in the bank, the bank had paid me a significant sum for what little I had saved with them. Granted, interest rates back then were huge compared to what you can earn in an account today. When I started working full-time, I learned that compound returns work even better in retirement plans, if you are patient enough not to touch your money for decades. Knowing this, and wanting to be a good steward of my family’s resources, I have faithfully contributed to a plan every year. I used to eagerly await the quarterly statements that featured my retirement balance, what my employer and I had each put into the account and how much the value of my account had changed over the previous three months. A big highlighted box on the front page was used to show the "growth rate" my money had earned. Often, the number was impressive, like 20% or 25%. Other times, not so much, perhaps 2% or 5%. Occasionally, there was a negative interest rate because my "assets" had devalued that quarter.

At PLNU, I teach a course that focuses on how the world’s poorest 2-3 billion people live and what can be done to change their circumstances. One issue that repeatedly comes up is how multi-national corporations, in pursuit of "maximizing profits in the short-term," can cause real damage to the environment and to the poorest people by their actions. As I began to explore how people in big business could continue to operate in such fashion when confronted with the harsh impact of their decisions, I started to realize that the pressure they felt for high quarterly returns came, in part, by people like me wanting to see our retirement funds make maximum returns, say 12% a year, on our quarterly statements.

There are no easy or simple answers to this question. Retirement funds have created investment vehicles for Christians who do not want to invest in alcohol, cigarettes, or defense companies. When I’ve asked them if they have funds that invest in companies that seek to minimize environmental damage and/or pay their laborers a fairer wage in countries where they operate, the fund managers doubt such funds will ever exist because they don’t envision there being a strong enough demand for these types of investment vehicles. I believe that with enough Christians asking these questions of their retirement funds, some change is possible!

 

 

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

 

  

 

 

Fermanian Business & Economic Institute
30
Mar

 

 

Contribution for a guest commentary series entitled “Radical Economics.”

by Lynn Reaser

Chief Economist of Fermanian Business and Economic Institute

 

Americans over the past 25 years have accumulated large amounts of debt, with many taking on burdens they could not sustain. The developments surrounding the recent financial crisis have a number of important lessons and implications, especially for Christians.

During the 1960s, 1970s, and first half of the 1980s, the total debt of American households (including credit cards, auto loans, student loans, mortgages, and other debt obligations) held steady at around 60% of gross disposable (after-tax) income. Debt-income ratios then started to rise and in fact doubled over the next two decades. In 2007, at the peak of the home-buying boom, household debt was equal to 126% of income.

Christian principles demand that households only take on debt they can manage. Many blame unscrupulous lenders in driving individuals to take out larger mortgages than they could afford. No doubt there were large abuses and lenders should have realized their ethical responsibilities demanded as a core of Christian principles. Adherence to Christian values also requires, however, that individuals take responsibility for their own actions. It is critical that we only take on obligations that we can honor. This also means that we must make allowance for the misfortunes that may befall us, including job loss, illness, or family emergencies. These are tests that God will give us all and we must be able to respond.

Christian values include self reliance. The recent financial crisis has pushed the government to the forefront with various programs to help homebuyers keep their homes. Lenders have been encouraged to write down the value of mortgages or make other concessions. This process has raised serious equity issues. Homebuyers who had saved to make larger down-payments and continue to make their mortgage payments on a timely basis have received no such support.

Christian standards imply that individuals honor their obligations. One of the most egregious practices recently seen involves the "strategic default". Many people bought homes with the expectation of rapid increases in prices and "easy" gains in their wealth. Now, with home prices in many cases below the value of their mortgages, they are choosing to walk away from their loans. This is clearly an abrogation of the responsible behavior demanded of all Christians.

In summary, Christianity certainly means that we can invest in our education, our homes, and in ways to improve the lives of our families and communities, but it also means that we assume only debt that we can manage in a responsible way.

 

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

 

 

Fermanian Business & Economic Institute
29
Mar

by Randy Ataide

Executive Director of Fermanian Business and Economic Institute


All of us have seen the humorous Capitol One commercials with the burly Vikings asking the catchy question “What’s in your wallet?” In the next few months, PLNU’s community will have multiple opportunities to enter into not only the “what” of our wallets, but also the why, how, where and when of them.

In April, PLNU’s Center for Justice and Reconciliation will be hosting Ched Meyers, a biblical scholar and popular educator. Meyers is a noted author, organizer and advocate who for 30 years has challenged and encouraged Christians to engage in peace and justice work and radical discipleship. At chapel and at Brewed Awakening, Meyers will interact with the PLNU community about his vision of compassion, equity and justice. Meyers’s writing and language are freely sprinkled with terms such as radical economics, ecojustice, jubilee and other phrases, all of which are concepts and recommendations that are uncommon to most conversations on economics.

But are Meyers’s views on economics correct? While I am not presently drawing any personal conclusions on his views, I must admit that I often wince when I hear church leaders, pastors and theologians speak on business and economic issues. While they may properly identify an unjust situation, I think that they frequently show little understanding of practical economic realities, especially when it comes to the operations of businesses and the decision-making processes that we use. All too often, sharp lines are drawn as if Christians engaged in business are not “fully” Christians, and that such efforts and endeavors are far apart from “God’s work.”

In the book “Church on Sunday, Work on Monday,” Laura Nash of Harvard Business School and Scotty McLennan, dean of religious life at Stanford University, suggest that business and economics are not as simple as religious leaders tend to think they are. Capitalism is frequently reduced to a monolithic concept labeled as “the market,” which inevitably exploits all participants except the most powerful. In my own experience, misconceptions about the marketplace create hurtful and inaccurate stereotypes that portray even Christian businesspeople as uncaring, unthinking, exploitative and unengaged. Events of the past few years that led to a global economic crisis certainly do need examination and critique, but we should work toward a richer and more accurate view of business and economics than is often portrayed – one comprising numerous relationships and actions, full of nuances and complexities.

Spurred on by this opportunity for the PLNU community to engage with Meyers, other PLNU voices will attempt to expand upon Meyers’s message. This encompasses a desire to have a deeper dialogue on the important issues of personal and communal economic decisions. Jamie Gates and I will appear in a follow-up chapel to discuss radical and jubilee economics, and faculty members of the department of sociology and the Fermanian School of Business will engage in a series of articles to appear preceding Meyers’s time at PLNU in April. There will likely be diverse opinions expressed on these issues, providing for interesting reading, but more importantly providing time for personal and communal time of study, reflection, prayer and action.

Many of us are looking forward to participating in a vigorous yet temperate and gracious dialogue with Meyers, and sincerely believe that this is an important topic for all of us at PLNU.

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

 

Fermanian Business & Economic Institute
29
Mar

Contribution for a guest commentary series entitled “Radical Economics.”

by Craig Van Hulzen

President PLNU Foundation Board, PLNU Alum (1994)

An appropriate interest rate on a loan is more complex question than often supposed. The immediate reaction to this question might conjure up negative thoughts of usury (exorbitant) or positive thoughts on brotherly love and kindness, both suggesting a Christian might be willing to accept a lower rate of interest than a “typical” lender.

Risk analysis has two critical components: identified known risk plus an allowance for the collective unknown, and both have to be considered. Known risk could include the specific reason the money is being lent (a house, location, the borrower’s capacity to pay, etc.) while the unknown is obviously more speculative (economic downturn, a house fire, illness, etc.) But the rate should also factor in opportunity cost.  For a PLNU student, choosing to go to college is an opportunity cost when you could be working full time. The economic benefit difference should be factored into the final decision.

Adding in the “Christian” qualifier further complicates the question.  Stewardship would demand that an investment seek to earn a rate commensurate with the risk of loss, yet do so in a dignified and fair method. But the Christian has even a further dilemma.  Is there a further “kingdom” opportunity cost? 

For those who urge lending between Christians at a rate below “market” (to another Christian) the risk exists (and often manifests itself) by the creation of “sour grapes” within the church. What should be said or not said among the parties and community when a Christian defaults on a loan to another Christian? Is forgiveness of debts always the solution? What of the issue of personal responsibility? Is it possible that an unintended negative “church” factor is born from lending at “below market” rates to other Christians? Nor are these decisions free to be made apart from outside forces,  for there have been more than a few problems in the Christian community when beneficiaries (churches, pastors, denominations, etc) commingle  investment responsibilities (endowment, fund, gift pool, etc) with well-intended actions benefitting fellow believers. Prevailing laws provide clear standards of fiduciary duty in these cases, regardless of Christian intent.

Likewise, lending to a non-believer might suggest an eternal opportunity cost for a believer for the funds could have been given to the church or to a Christian instead. But should we view loans from Christians to non-Christians as a potential means to open doors for conversations of talking with them about Jesus? As to the source of money, should it be lent if it is “leveraged” or borrowed money from another source? Each door in this analysis seems to open another door for consideration.

It seems to me that there is no “one size fits all” answer to what are appropriate terms for Christians to loan money, both to other Christians and to non-Christians. It may well be that this tension is the result of our cognitive dissonance, or the burden of holding several conflicting ideas simultaneously. While we may want to reduce a complex situation to simple platitudes, it may be that in risk analysis we cannot do so. Yet clearly the degree to which these practices conflicts or aligns with the lender’s moral code is of critical importance to the analysis.

 

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

Fermanian Business & Economic Institute
29
Mar

Contribution for a guest commentary series entitled “Radical Economics.”

by Mark Undesser

PLNU MBA Student


Answer: Accountability and vocation is a significant topic, one made even more complicated by the current economic crisis. The tendency to compartmentalize and prioritize vocations, with some as “godly” (pastors, physicians, etc.) while others are “ungodly” (business, politics, etc.), and others perhaps “neutral” (farming), is in error. In Ruth 2:16, Boaz instructed his harvesters to pull out extra bundles of grain and leave them on the ground for Ruth, but while G_d made extra provision for her the entire crop was not given away to feed the poor. Why? To do so would be ridiculous.  If Boaz’s lands became unprofitable then all would starve.

Similarly, in ancient Israel landowners were forbidden to pick their fields clean (Lev. 19:9-10; 23:22), allowing for the practice of gleaning.  The principle of vocations working together to serve all is the higher principle, not that some are godly and others are not. In Leviticus 5:7&11, G_D makes provision for the acceptable sacrifice of the poor.  If someone could not afford a lamb or a goat, they could sacrifice turtledoves, pigeons or flour.  Hence, G_D made provision for the poor to survive physically and spiritually.

 Why are these ancient principles important to the PLNU community? Several things stand out. First, there must be a harmonious balance between provision of our resources and self-sustainability.  This is not just the task of formal leaders, but rather all are accountable to love G_D, to love each other and to help guide the hearts and minds of all people towards G_D, just as He provides for us.  The occupations we choose and the businesses we run must be ethical and we should contribute to society in a positive way. But we are a body, and room must be made for a diversity of talents, occupations and gifts.

Second, everything (including how we make a living) belongs to G_D and is on loan to us.  We are to steward our talents in a way that produces fruit (Matt 25:14-28). My calling may be in starting businesses that focus on social impact issues like hunger or protection for battered women. For me, this is how I try to make myself accountable in making a living. I believe I can be a far more effective Christian in service through these means.

Third, it does not matter if you own a company or work for one, as we can adapt or influence their employers, products and fellow employees for the common good. This is every bit as vital a ministry as more “formal” service, and as a PLNU MBA student, I want to have my studies and vocation to be a blessing to G_D.

 

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

Fermanian Business & Economic Institute
29
Mar

Contribution for a guest commentary series entitled “Radical Economics.”

by Mary Conklin

Professor of Sociology

I do not have a magic formula for determining the level of acceptable debt.  I do not evaluate my life in terms of the things I own (Luke 12:15), but how I live, including stewardship of the things I have been given.  Accordingly, I subscribe to the concept of living simply–I live comfortably, but not lavishly.  Rich Christians in an Age of Hunger by Ron Sider prompted me to rethink my attitudes about buying things just because I had the money.  I have become a more careful, thoughtful, and restrained consumer.  I acquire what I need, plus a few wants.  My informal guidelines is never to owe more than I can easily pay off.  I think wise investments, like the purchase of a home, are worth the accompanying levels of indebtedness, as long as one’s financial future is not jeopardized by the size of the debt.  These principles determine what I consider acceptable levels of indebtedness.

The other side of this issue is being debt free or what can I do with money not needed to pay debts.  In the parable of the widow giving her mite, we are reminded that the Lord’s concern is about how much we keep, not the total of what we give.  If our giving corresponds to the widow’s, enough money is given to enable the church to care for the poor and finance missions in a significant way.  The Lord reminds us that we are to care for the poor as if they were us.

Debt also brings us to the issue of interest.  I have only loaned money to friends and charged no interest.  Just as I have been given resources, I want to distribute the resources to others.  Charging interest would not be consistent with the desire to help others.  The Old Testament practice of Jubilee where debts were cancelled every 50 years and the land returned to its original owner is an important principle.  Jubilee is a way to produce economic leveling and in so doing, care for the poor.

 

 

To provide the PLNU community a wide variety of perspectives and experiences on economics, the CJR and the FBEI have coordinated a series of students, alums, and professors to share their ideas on a variety of topics, most of which can be found in the PLNU Weekly, the school newspaper. PLNU, the Center for Justice and Reconciliation (CJR) and the Fermanian Business & Economic Institute (FBEI) value different viewpoints on important topics, and therefore we have also posted the articles here in the News Section (to the right). The opinions expressed in these articles, as well as those of Ched Myer, are those of their individual authors and do not necessarily reflect the views of PLNU, the CJR or the FBEI.

Fermanian Business & Economic Institute