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Pharisees and scribes from Jerusalem notice that the disciples are eating without washing their hands first.
The issue is not germs, as it is for our moms, but religious purity. In an aside, the narrator explains various concerns and rituals regarding food and other culinary items.
An alarm is going off here. While the text ascribes these practices to "the Pharisees, and all the Jews" (7:3), historians start debating whether this generalization is in fact accurate in light of what we know about Jewish practices at the time. Also at stake here is how we're supposed to understand Mark's position vis-à-vis Judaism.
The Pharisees ask Jesus why his disciples fail to adhere to the "tradition of the elders" (7:5) by eating with defiled hands.
In response, Jesus quotes the prophet Isaiah as an apt description of the Pharisees (check out Isaiah 29:13). Basically, they're "hypocrites" or big fakes, who honor God in word and not in substance. They also make up unnecessary commands for people to follow.
Jesus proceeds to work with the distinction between the "tradition" that people pass on and the actual command of God. Jesus claims that Pharisees only care about the former at the expense of the latter, which is stupid.
Try to follow the argument. Moses recorded the command of God to honor father and mother and added that anyone who curses them should be put to death (you can check Jesus's accuracy by looking up Exodus 20:12 and 21:17, Deuteronomy 5:16, and Leviticus 20:9).
But Jesus argues that the Pharisees neglect this command when they deem any service they might offer their parents as a gift to God. In modern parlance: sorry mom, the money for the nursing home is going to God.
Conclusion? The Pharisees transgress one of the Ten Commandments and make themselves feel good about it because they purportedly do so in the name of their own tradition. And that's just one example of many.
Now, give your smart brains some exercise and try to articulate how this answers the Pharisees' question about hand washing (7:5). Here's a big clue: both the narrator and the Pharisees themselves deem these purity concerns a "tradition of the elders" (7:3, 5) rather than a command of God.
Jesus tells the crowd to pay attention to another parable. Nothing external can enter a person and make him or her impure, but it's what comes out of a person that makes him or her impure.
In private the disciples are like, huh? They're still slow to understand parables (remember 4:13).
Next up, Jesus explains the wonders of human digestion. When something like food enters a person it goes into the stomach, then into the toilet. How can the fact that you have to eat and then poop make you impure? Even Jesus can't resist a good potty joke.
The narrator gets excited and interrupts Jesus to point out the significance of what he's saying: "He's declaring all foods clean!" (7:19). This may not seem like a big deal to most of us, but in the earliest days of Christianity the question of whether non-Jewish converts to Christianity had to follow Jewish food laws was a hotly debated question (for proof, take a look at Acts 15:28-29, Romans 14:13-23, and 1 Corinthians 8:1-11:1).
It's what comes out of your heart—not your rear-end—that makes you impure. You know, stuff like evil thoughts, sex crimes, theft, murder, adultery, greed, wickedness, deceit, licentiousness, the lustful eye, blasphemy, arrogance, and stupidity.