jew conomics source sheets

Jew-conomics

An Exploration of the Jewish Perspective on Economic Systems.

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The Great Soda Market Experiment

Let’s do a recap of the Great Soda Market Experiment we just conducted:

• Explain to the group what your role was in the Great Soda Market Experiment.

• What did you think of the Soda Experiment?

• Were there winners and losers in the Experiment? Who were they?

• What dictated who won and lost in this game?

• How fair was the game we just played?

• How realistic was the soda experiment to how the actual economy works?

• Is this even a relevant discussion for us to be having?

• What relationship is there anyways between religion and economics?

• What role does economics play in our lives?

• Should it have more of a connection to religion that it does?

• In what ways can we find connections between Judaism and the economy?

• Can you think of any stories in the Bible, or any Jewish Laws, that relate to economics?

• What does halacha tell us about our business dealings and other financial issues?

Why Talk About Economics?





Capitalism:

Capitalism is the economic system in which the means of production are distributed to openly competing profit-seeking

private persons.

Investments, distribution, income, production and pricing of goods and services are predominantly determined through the operation of a free market in which anyone can participate in,

rather than by central economic planning.


• Which one of these sounds better?

• Which one of these sounds like what we have in America?

• Are these the only options out there?

• Is either of these socio-economic models better based on Jewish values?

Socialism:

Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and

administration of the means of production and distribution of goods, and the creation of an egalitarian society.

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society

that controls capital and creates an unequal society.





The Requirement of Charity


• Why did the Torah require everyone to give charity?

• Shouldn’t the Torah say that giving charity is good, and allow people to choose if they want to give charity or not? Why does it have to require specific amounts?

• Shouldn’t people have complete ownership over their property? Why must they allow others to come onto their fields?

• Does mandated tzedaka mean the same thing as redistribution of wealth?

ויקרא יטט ובקצרכם את-קציר ארצכם לא תכלה פאת שד לקצר ולקט קציר לא תלקט. י וכרמ לא

תעולל ופרט כרמ לא תלקט לעני ולגר תעזב אתם אני יהוה אלהיכם.

When you reap the harvest of your land, you shall not reap all the way to the edges of your field, or gather the gleanings of your harvest. You shall not pick your vineyard bare, or gather the fallen fruit of your vineyard; you shall leave them for the poor and the stranger: I the Lord am your God.

ויקרא כגכב ובקצרכם את-קציר ארצכם לא-תכלה פאת שד בקצר ולקט קציר לא תלקט לעני ולגר

תעזב אתם אני יהוה אלהיכם.

And when you reap the harvest of your land, you shall not reap all the way to the edges of your field, or gather the gleanings of your harvest; you shall leave them for the poor and the stranger: I the Lord am your God.

Rambam Hilchot Matanot L’Aniim:The amount to be given is as follows: If he has sufficient resources, he should give according to the need of the poor. If his resources do not extend to this, he should give up to one-fifth o his possessions for an ideal fulfillment of the mitzvah, one-tenth for a normal fulfillment, and less corresponds to an ungenerous fulfillment.

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Setting Market Prices


• What was the reasoning behind setting market prices?

• Why couldn’t storeowners charge as much as people were willing to pay?

• Wouldn’t competition between different stores keep the prices reasonable?

ויקרא כהוכי-תמכרו ממכר לעמית או קנה מיד עמית אל-תונו איש את-אחיו.

When you sell property to your neighbor, or buy any from your neighbor, you shall not wrong one another.

הלכות מכירה פרק יב

א אסור למוכר או לקונה להונות את חברו, שנאמר "וכי תמכרו ממכר לעמיתך, או קנה מיד עמיתך--אל תונו, איש את אחיו" (ויקרא כה,יד). ואף על פי שהוא עובר על לא תעשה, אינו

לוקה, מפני שניתן להישבון; ובין שהונה במזיד, בין שלא ידע שיש במכר זה הוניה--חייב להשיב.

ב כמה תהיה ההוניה ויהיה חייב להשיב, שתות בשווה. כיצד: הרי שמכר שווה שישה בחמישה, או שווה שישה בשבעה, או שווה חמישה בשישה, או שווה שבעה בשישה--הרי זו

הוניה; ונקנה המקח, וחייב המונה להחזיר את ההוניה כולה למתאנה.

The rabbis of the Talmud used this as a basis for a series of specific laws on the subject. They ruled that if the price charged was more than one sixth above the accepted price, the sale is null and void and the seller must return the buyer’s money. If it was exactly one sixth more, the transaction is valid, but the seller must return the amount overcharged. If it was less than a sixth, the transaction is valid and no money need be returned.

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• Why would the Torah prohibit charging interest on loans?

• What would be the motivation for someone to loan if there was no interest involved?

• Why did the Rabanan institute the Heter Iska?

• Is the Heter Iska just a loophole to get out of an inconvenient halacha?

• Why are loans so important?

• Were the rabbis concerned with the Jewish people having a slow-growing economy?

Interest-Free Loans

If you lend money to My people, to the poor among you, do not act toward them as creditor; exact no interest from them.

שמות כבכד אם-כסף תלוה את-עמי את-העני עמ לא-תהיה לו כנשה לא-תשימון עליו נש.

The Sages said as follows:

Rabbi Shimon says: Those who lend at interest lose more than what they gain. And moreover, they render Moshe our teacher wise, and his Torah truth. And they say: "If Moshe our teacher had known that there would be profit in the matter, he would not have written it." (Bava Metzia 75b)

HETER ISKA

In a heter iska, the "lender" and the "borrower" turn into "investor" and "businessman." Thus, it is noted that all the documents mentioning the terms "borrower" and "lender" actually mean "investor" and "businessman." The investor gives money to the business, and the businessman is supposed to invest the money in a business that yields profits. The profit and loss derived from the money is divided equally between the investor and the businessman, except for the small salary that the businessman takes for his work.

The important point in the agreement is that the investor cannot know exactly how much the businessman profits from the business, and so the parties agree among themselves that the businessman is required to prove the truth of the figures presented by him. If the businessman is unable to prove to the investor how much money he earned, he must pay him demei hitpashrut, at the rate of interest. Practically speaking, the businessman (i.e., the borrower) is unable to prove how much his business profited or lost, and therefore he must pay the investor (the lender) the agreed upon demei hitpashrut.

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Land Distribution


• On what basis was the land given to the Jewish People when they entered the land of Israel?

• Why didn’t the stronger or more powerful tribes get a larger portion of the land?

• Was this designed only to make sure the country began with each person equal, or was it designed as a model for always keeping people as equal as possible?

במדבר כו

נב וידבר יהוה אל-משה לאמר. נג לאלה תחלק הארץ בנחלה במספר שמות. נד לרב תרבה נחלתו ולמעט תמעיט נחלתו איש לפי פקדיו יתן נחלתו.

The Lord spoke to Moses, saying, “Among these shall the land be apportioned as shares, according to the listed names: with larger groups increase the share, with smaller groups reduce the share. Each is to be assigned its share according to its enrollment.

Shmita and Pruzbul

Every seventh year you shall practice remission of debts. This shall be the nature of the remission: every creditor shall remit the due that he claims from his fellow; he shall not dun his fellow or kinsman, for the remission proclaimed is of the Lord. You may dun the foreigner; but you must remit whatever is due you from your kinsmen.

דברים טוא מקץ שבע-שנים תעשה שמטה. ב וזה דבר השמטה שמוט כל-בעל משה ידו אשר ישה

ברעהו לא-יגש את-רעהו ואת-אחיו כי-קרא שמטה ליהוה. ג את-הנכרי תגש ואשר יהיה לאת-אחי תשמט יד.

And the Rabbis instituted the release [of debt] in honor of the 7th year. Hillel saw that the nation had ceased lending money, one to the other, so he arose and established the pruzbul.

מסכת גיטין פרק ד דף לו, בותקינו רבנן דתשמט זכר לשביעית ראה הלל שנמנעו העם מלהלוות זה את זה עמד והתקין

פרוסבול

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WHAT IS A PRUZBUL? -Excerpted from Rabbi Alfred S. Cohen, www.jlaw.com

Despite the important moral and religious lessons to be learned from the mitzvah of shemitat kesafim (cancellation of debts), and despite the fact that observance of this practice is a specific Torah directive, the reality is that when economic circumstances became difficult, not all people were able to live up to these high ideals. The rich simply refused to lend money to the poor as the Sabbatical Year approached. Consequently, some two thousand years ago, Hillel the Elder came to the conclusion that drastic action had to be taken. Thus, he instituted the pruzbul.

The pruzbul is a legal device which, in effect, transfers a private debt to the beth din, the Jewish court. Shemitat kesafim cancels only debts between people, not monies owed to court. Therefore, the court is able to collect the debt whenever it desires, even after the Sabbatical Year.

Rabbis do not have the authority to cancel a Torah imperative nor to override that which the Torah forbids. Under the circumstance, Hillel devised a system -- the pruzbul which would permit a debt to be collected even after the Sabbatical Year, yet without violating the Torah's command.

Shmita and Pruzbul - Continued

• Why did the Torah mandate all loans to be excused on the Shmita Year?

• What problem arose that cause Hilel to institute the Pruzbul?

• Similar to the Heter Iska, how can our Rabbis make rules that seem to ignore explicit laws of the Torah? What was so bad that made them do this?

• Is it possible that the rabbis were concerned that the ideal nature of man as outlined in the Torah was not something the Jewish people could live up to at that time?

• What was the reason to leave the land fallow?

• Why don’t we have the right to do with our land as we please?

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שמות כג

י ושש שנים תזרע את-ארצ ואספת את-תבואתה. יא והשביעת תשמטנה ונטשתה ואכלו אביני עמ ויתרם תאכל חית השדה כן-תעשה לכרמ לזית.

Six years you shall sow your land and gather in its yield; but in the seventh you shall let it rest and lie fallow. Let the needy among your people eat of it, and what they leave let the wild beasts eat. You shall do the same with your vineyards and your olive groves.

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Conclusion Discussion

• Are the laws in the Torah that “look out for the little guy” an endorsement of Socialism? Would it be so bad if they were?

• Does Jewish Law have socialist or capitalism leanings?

• Is there a presentation of two different sets of values for Jewish economics: one that is idealistic and one that is realistic?

• With these ideas in mind, what application is there from Jewish Law to speak to the American Economy? Is America’s economy Socialist, Capitalist, Both or Neither?

• What are the other attitudes that the Torah takes on Money? What role should money play in the lives of the Jewish people?

• Do we have Jews view financial matters the same as other people? Do we serve as an example to the world?

Below is an excerpt from Rabbi Blau’s article on the Jewish response to

Communism. Communism had socialist beliefs, but had many other beliefs not inherent to socialism. This excerpt refers to the property of ownership in Jewish

Culture

How does Rabbi Blau present the concept of property ownership in Jewish

culture?

How much of a right do Jews have to own their property?

Is it a better system to have private ownership, or public ownership?

Rabbinic Responses to Communism - R. Yitzchak Blau





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