Tag Archives: money

Should I buy a flat screen tv?

In the last few weeks, maybe a couple of months, the volume on my tv has been on the blink. The remote control works only sporadically (it works fine for other functions) and the control panel on the side of the screen sometimes changes the volume, sometimes the channel. It seems as though the wires are crossed at times.

The tv itself is about 10 years old. My sister and brother-in-law had it originally, but I bought it off them some years back when they upgraded their tv. As things stand at the moment, I don’t need a tv. In fact no one needs one; they are a luxury item that we in the decadent west have in many of our homes.

There is no question of affordability. One can get quite a good model for around £200 these days. The way I organise my finances, I have an account that is called “treat” which I put a bit into each month and buys a few luxuries. For example, last year I had a holiday. That was my third in 13 years. I haven’t got enough for a holiday yet but I have got more than enough for a new tv. It would be nice to have a flat screen (the current one is a cathode-ray Sony Trinitron wide, which takes two people a lot of effort to lift!) and at present it seems like an expense that one could at least rationalise.

My worry is this: what if I become unemployed? Readers who have kept tabs on this blog for the last 2 years will know that I got made redundant in 2012. That could happen again. I don’t know that it will, but there have been some changes in the company I work for over the last few months. It’s not unthinkable that a corporate shake-up could result in me being out of a job. Or I could become ill. I am very thankful that I have good health and have only had need to take 2 sick days off work in the last 7.5 years. One never knows when one might have an accident that puts them out of work, or be diagnosed with some debilitating condition.

It’s not that I would suddenly be unable to pay for a new tv since I would have bought it whilst employed, but if our tabloid press government and its parroting acolytes are to be believed, then there are fewer evils that are more symptomatic of a dysfunctional society than an unemployed person in possession of a flat screen tv.

The fact that hundreds of thousands of people have been driven to use foodbanks over the last few years is, of course, not a problem at all. After all, Iain Duncan Smith must have the best interests of the poorest and most vulnerable in society at heart. The fact that I spent 6 months unemployed in 2012, filling my days with job applications, interview preparations and travelling to and from interviews where each job had anywhere from 6 to 30 applicants going for it, was merely a side effect of my own laziness and unwillingness to work. At least, that’s what I am to believe if I accept the coalition’s rhetoric.

The same goes for all those who are now in the shoes I once wore. When Esther McVey told people to get a job at Costa, of course she knew full well that over 1,600 people had applied for just 8 jobs. Those that didn’t find employment will soon realise that the reason for that is because they are workshy freeloaders, not willing to obey the simple imperative to “get a job” since that simple command is, naturally, capable of being followed without the need for intervention or a decision being made by any person other than the jobseeker. After all, employers have no choice but to accept all applications from anyone who wants a job enough.

Don’t they?

Book Review: Theology of Money by Philip Goodchild

I picked this up in a sale from SCM Press, the title appealing to me mainly because I am a christian who works in finance. So I bought it on the basis of the title alone. I had never heard of the author nor had the book been recommended to me. In hindsight, I think I approached it with a fairly fixed expectation, based on the title. What I thought I would be reading would be an exposition of the idea of wealth, property, exchange and society within a biblical context, drawing out principles and then trying to apply those to either fitting around modern economics or proposing a fundamental shift in the very basis of the latter. In other words, I was expecting a fair bit of theology and have that applied practically to money.

If that’s the sort of book you want to read, then Theology of Money will be a great disappointment to you. In truth, there is not much theology in it; it is mostly a treatise on economics with a spattering of vague references to theology which might well be just enough to deter non-christian economists from it, if the title hadn’t already done so.

So what exactly is it all about? Well, Goodchild has adopted the style of Adam Smith (who seems to be mentioned more than any other economist) in looking at the very nature of money. It’s not about macroeconomic policy, but something far more fundamental than that. One could characterise the bulk of the book as being an answer to the question, ‘what is money?’ In style, it reads less as a book for the educated layman, more a thesis for the expert. It is a very tightly argued piece, with the analysis coming very thick and fast. This tended to prompt one of two reactions in me: I ether read it quite slowly, going over each paragraph a couple of times, or else I glossed over slightly, reading a page and at the end of it being none the wiser what the point was that was being made.

So what of the argument that is made? Well, Goodchild’s main premise is that money as we currently know it fulfils a variety of different roles that need necessarily be measured by the same unit. For example, money is the promise of things in the future. i.e. if I have some savings, then this is the promise of a deposit on my own home. Yet it also has the function of being the measure of past transactions, as in accountancy, the field of finance in which I work. I could critique his particular take on accountancy, as it doesn’t really give a true and fair view of the profession, describing it as a ‘reasonable fiction’ citing the example of debtor on one’s balance sheet as being a made-up quantity, as the debtor has not paid. Yet no mention is made of the accruals principle.

An interesting thing to note about the book is that it was published in 2007, a year before the crash that triggered the global financial crisis. So how we might think about money and credit has had a sea change since Goodchild wrote this. At several points then, I saw him to be somewhat prophetic in his assessments. For example, “On the one hand, bankers are placed in a position of power in relation to other classes, since they appropriate their property through interest. On the other hand, bankers remain susceptible to the fortunes of other classes, since a default on a loan may lead to a loss of reserves and a contraction of credit.” Yet just as one might think he was really onto something, little more than a page later, he carries on, “Misfortune can lead to significant losses; yet such losses may be controlled and limited by an effective money management strategy and automated stop orders. Since the risks can be limited in this way, it is possible to take out highly leveraged positions with limited risks.”

In his final proposal, he suggests that credit needs to be evaluated by a separate kind of bank, though he then goes on to describe the operations of this bank as being the same as a normal bank, only that it must be highly profitable and it must do so by engaging heavily in speculation on the markets. Given what we know now, I wonder if Goodchild would stand by this or if he would opt to have a radical revision.

I struggle to think of those to whom I might recommend it. Perhaps those who are heavily involved in finance and would like to read a different take from that of Smith, Marx or Keynes (interestingly neither Friedman nor Hayek are referenced, the closest to these extremists he comes is Niall Ferguson).  While I could not agree with some of his assessments or proposals, it is a book that, if taken seriously, makes you think. For that alone, it is worth reading, but I won’t be rushing to urge anyone to push it to the top of their reading lists.

Should christians accept bonuses?

Background

I had a recent chat with another christian when this question came up as part of the conversation. Anyone who knows me or reads this blog will know that I am distinctively left-leaning. One of the main reasons for this is because I am a christian. I have a lot of difficulty understanding the idea of the “christian right” as I consider it to be an oxymoron.

Subsequently, I have quite strong views when it comes to money. So I wanted to lay out my reasoning for why I think the answer to the question ought to be “no,” though I wanted to understand the counter-argument. As a result, I asked around a little bit, which is laid out below. I have also attempted to play devil’s advocate.

Of course, I am not judging christians who do accept bonuses as part of their remuneration. If you do, all I’d like to do is make you think and question your motivation for accepting it.

Why I think the answer ought to be “no”

The fundamental reason why I would not be happy to accept it is one of motivation. Without giving too much confidential information away, employees in my company are given a choice. They can accept a fixed salary of £x per year, or else they could take a lower salary with a bonus which, when combined is greater than £x. So let’s say someone might be offered a basic pay of £30k, or they might be offered £28k with a £4k bonus. Of course the bonus is tied to their meeting certain conditions. If they meet their targets, they will obtain their bonus; if they get part-way they will be awarded part of their bonus. If they don’t meet the minimum target, they won’t get anything.

To my way of thinking, this creates a danger that we then work, our motivation becomes the creation of personal wealth. Following on from my recent post on worship, this would indicate that we are worshipping money. Of course, we may to rationalise this by claiming that we are accepting the bonus structure in order to pay our rent, fund the train fares, feed the family, etc. What I do not like about this view is that it creates the false impression that we would not be able to make ends meet without the bonus.

I would rather my motivation to work be because I want to do a good job. As I touched on briefly recently, there are many ways we can worship. To me, trying to do a good job at work is a part (though by no means all) of my worship. There is the very famous warning in 1 Timothy, where Paul writes “if we have food and clothing, we will be content with these. But those who want to be rich fall into temptation and are trapped by senseless and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil, and in their eagerness to be rich some have wandered away from the faith and pierced themselves with many pains.” (1 Tim 6:8-10, NRSV) Often only a part of that is quoted, but I wanted to include the lot.

Having worked in financial services for several years, and subsequently working in the finance side of a different type of business, I am surrounded by those who are obsessed with money. It would be very easy to get sucked into that world, where I’d care about profit and trying to boost my own pay, quite possibly at the expense of others. That’s not someone I’d ever want to become. I want to be someone who is content with what I have.

Another passage in my thinking (though I recognise that money is not the primary purpose of this particular discourse) is Romans 4, where Paul writes, “Now to the one who works, wages are not credited as a gift but as an obligation.” (Romans 4:4, NIV) This is as close as I can find to anything about bonuses. I hope you don’t think I’m stretching scripture too much; that’s not my intention.

The devil’s advocate argument (why it might be OK)

You have to recognise that the pay culture we have in modern society would be totally alien to those living in the 18th century, let alone anyone before then. So the people of the bible wouldn’t have known enough to either speak in favour or against company bonuses.

There are various people in the bible who had great wealth and who were not condemned for it. Abraham was a bit of a Richard Branson-type figure of his day, and in terms of a single individual owning a high proportion of the world’s wealth, Solomon was probably one of the richest men in history. Yet neither of them were condemned for their wealth. It was incidental to them. This brings us on to the so-called ‘prosperity gospel.’

Proponents of this view often cite Psalm 37 as a justification for not only claiming that wealth is acceptable, but that it is a sign of reward for faithfulness: “Trust in the LORD, and do good; Dwell in the land, and feed on His faithfulness. Delight yourself also in the LORD, And He shall give you the desires of your heart.” (Psalm 37:3,4, NKJV) I interpret this quite differently. Given the preamble of verse 3, I think what constitutes the “desires of [our] hearts” will be changed so that we no longer will be desiring of wealth, but rather we will be desiring the riches of God. (c.f. Romans 12).

Given the balance of the number of times wealth and money are referred to in the bible, I think that prosperity advocates must have a hard time defending their position. For brevity, I’ve omitted most references I could use to back this up; maybe another day.

Some practical considerations

Of course, not everyone is given a choice to not have a bonus as part of their pay packet. You have to be in a particularly high-end job to be able to change the terms of your employment contract. Given that I have only ever taken jobs whilst unemployed, I never had much bargaining power, so I simply wouldn’t do anything to jeopardise the prospect of employment.

Then you have the choice of what to do with it. I asked on Twitter what people thought about it, though I only got 1 reply which was that it’s OK to accept a bonus, so long as it is donated to charity. More widely, there are a number of good things you could do with additional money, of which giving to charity is but one. However, I think christians always have to keep a tight reign on their motives. For example, if you donate via a Just Giving page (or similar) do you disclose your name and the amount you are donating, or do you go by the principle of “But when you give to the needy, do not let your left hand know what your right hand is doing.” (Matt 6:3)?

Conclusion

For my conscience, I am happier to not take a bonus. I do not think it is inherently wrong to do so. What is important is what you do with it. In this, I probably ought to be honest about my own pay packet. I contribute to a pension scheme which removes from my pay packet 10% of my gross pay. This pushes me down into the “basic rate” tax band. Had I opted not to do this, I would be higher rate tax payer, having a marginal rate of 40% on a small portion of my salary. As it stands, my effective rate (total tax+NI/total pay) is 26.7%. From this, you can tell that I am paid significantly more than the average salary. This is slightly tempered by my train fares of £87.50 a week. Once you take tax into account, this means that if I got a job within walking distance of home, I could take a gross pay cut of just over £6,000 per year and it would have no effect on my take-home pay.

Given that I am such a highly paid job, putting me amongst the top few percent of UK workers, I think that to demand any extra would be selfish and immature. When I work long hours, I don’t complain about a lack of overtime, in spite of pressure to do so. When I think of all the millions in this country alone (let alone the billions elsewhere in the world) who do not have the material riches that I have, it is very humbling. “From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.” (Luke 12:48b, NIV) It is a huge responsibility and one that has to be taken seriously. Personally, I find those who have abundant material wealth, and yet who complain about a lack of it, to be repugnant; it’s one of the biggest intolerances I have. Maybe I’m being harsh and lacking grace; I don’t know.

So that’s my choice. What’s your take on the matter?