Give Us A King! (Faith in Government)

In the time of Samuel the prophet, the people of Israel wanted a king like the nations that surrounded them (1 Sam 8). Samuel was utterly dismayed by this development. The people of Israel had no ruler, yet were prosperous. They had no king, yet were thriving in the promised land. God Himself was their King and led the people of Israel through His revelation to the prophets. Yet, this wasn't enough for them. The people of Israel still felt the uncertainties of life and were deceived into thinking that if they had a king like the surrounding nations, then maybe they wouldn't feel so insecure.

When Samuel inquired of God about this request, God responded by saying that it wasn't Samuel that was being rejected, but God. He instructed Samuel to first warn the Israelites about the dangers of having a king. Here was the warning given by Samuel (1 Sam 8):
vs 10 Samuel told all the words of the LORD to the people who were asking him for a king. 11 He said, "This is what the king who will reign over you will do: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12 Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers and cooks and bakers. 14 He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16 Your menservants and maidservants and the best of your cattle and donkeys he will take for his own use. 17 He will take a tenth of your flocks, and you yourselves will become his slaves. 18 When that day comes, you will cry out for relief from the king you have chosen, and the LORD will not answer you in that day." 19 But the people refused to listen to Samuel. "No!" they said. "We want a king over us. 20 Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles."
Simply put, God was warning them that when you request a powerful human government (in any form) to "go before you and fight your battles" that your wealth and your freedom will be consumed by that government and the security sought will ultimately not be found. In the end you will have nothing but the insecurity you were hoping to remedy.
However, God does not force people to trust Him, so He instructed Samuel to go to the tribe of Benjamin and select Saul as king over Israel. They got their King, and the Bible tells the sad story of the history of Israel under those kings.

I see many parallels to the request of Israel and the shift of the balance of power in the United States today. As a people/culture drift away from faith in God, they look elsewhere to find security. Humanity has always been bedeviled by the illusion of the physical. Israel rejected Christ because He spoke of a spiritual Kingdom - they wanted a physical one. We are beset by a desire to see with our eyes, touch with our hands, and hear with our ears the entity that we entrust with our lives. How often did ancient people make useless idols rather than trust in God? It has been a perpetual problem for humanity.

People are no different today, but rather than idols, they look to strong governments to provide for them. Unfortunately, the same warning given by God to Samuel holds true today. When you ask for a physical solution to a spiritual problem, your "solution" will consume all your wealth, take away your freedom, and leave you with nothing but misery. Mankind has never found a way around this problem.

Socialism, the generic term for the system that attempts to provide for people through strong government and central planning, fails time and time again. The ideas that comprise socialism have incredible staying power because of the same issue within the human heart - a desire to trust in something physical that you can see and understand.

Our society today screams out for a king. They are delusional in their adoration of Barack Obama. The love, excitement, and anticipation of what is possible with him as President reaches beyond delusion to the pathetic. Asking one man to provide for you is frankly insane. Governments are bureaucratic systems that are unresponsive to the needs of the people they "serve" while consuming vast amounts of their wealth and passing laws that restrict their choices. A sane mind wants as little government involvement possible. A sane mind recognizes that governmental power rests in the balance against individual rights - as government power increases, individual rights decrease. If a government has the "power" to do a given thing, you no longer have the "right" to choose an alternative. If you give the government the "power" to collect taxes, you lose the "right" to keep your money.
This loss of choice is the ultimate insecurity. You can no longer make decisions that are in your own best interest. The greatest threat to an individual's freedom, prosperity, and quality of life is the concentration of power into the hands of a few. When governments (or kingdoms, or dictatorships, or monarchys, etc) are not limited in their power, people suffer.

The founding of the United States of America is a study in people attempting to escape the ultimate insecurity of life under kings. People suffering under the hand of oppressive governments realized that security wasn't found by the hand of a powerful king. They came to the conclusion that the proper role of government is to preserve liberty, not provide security (in the sense of money, a home, a job, etc). The United States of America was founded to establish this principle of limited government and quickly became the greatest nation on earth because of it.

Faith is the only remedy for insecurity. What we see today is "faith" in government rather than Faith in God. Government cannot provide for you, cannot give you security, cannot solve your problems. It can only make your problems worse by stealing your freedom to resist its choices.

There is a role for government - to protect our freedom. The constitution lays it out beautifully. Those who seek from Government what they should be seeking from God are not only going to destroy themselves, they will destroy this nation in the process.

One Aspect of the Financial Crisis

I've attached a great article below that shows just one aspect of the government meddling that caused the current financial crisis. In a nutshell, when someone can't pay their mortgage, the bank forecloses on the house - this prevents the bank from losing all their money and allows the person living in the house to move on to a place to live that they can afford. Not much is lost by the home owner, especially these days, because not much was put down. Essentially, they paid "rent" while they lived there - in the form of their mortgage to the bank and the small amount of money they put down.

When government; however, prevents the bank from quickly foreclosing on the house and instead wants to protect the "innocent" homeowner (who isn't paying his bills), the bank cannot put the house back onto the market and recoup its losses. This keeps the banks money tied up in houses that it can't unload.

This government policy causes two things to happen:
  1. Banks can no longer afford to lend - that is why we have a "credit crisis". If banks can't secure the loan with the value of the home, they have greatly increased risk in making the loan. (Unless it is government backed, which fanny and freddy provided, which is why there was "irresponsible" lending.)
  2. People have no incentive to pay their mortgage. If they get to keep the house when they decide not to pay, there is no reason (other than character and integrity) to pay their mortgage. Sure, many will pay in this scenerio, but many will not. Hence, irresponsible borrowers ride on the efforts of the responsible borrowers.

Halting foreclosures is bad economic policy and one important aspect of this crisis. We must get the government out of this industry! These bad policies distort the market in ways that encourage people to make irresponsible choices. Check out the following article.


The Libertarian: Greed, Or Incentives?

Richard Epstein 09.23.08, 12:01 AM ET

It had been my devout wish to write a set of disinterested columns about labor markets to illustrate the power of the presumption against state regulation of voluntary agreements. But the financial meltdown of the past week has rudely interrupted my plan to pillory the minimum wage.

Instead, I shall turn on a dime to address two connected questions: How did we get to that sorry state where great institutions topple, and what should be done?

On both questions, our bipartisan consensus is holding true to form. In a system that is chock-full of heavy regulation, they instantly blame the current collapse on the excesses of the free market, for which a still heavier dose of regulation supplies some supposed cure. That indictment contains few particulars. It typically rests on a populist broadside whose centerpiece is greed on Wall Street, but never on Main Street--where there are more voters.

This prior is all wrong. Greed is a constant of human nature. Financial meltdowns are not a constant of economic political life. It takes, therefore, an understanding of the overall incentive structure to explain why selfish economic behavior produces great progress on some occasions and financial ruination on others.

On this question, your stalwart libertarian is persona non grata in respectable company. If voluntary markets normally align private incentives with social welfare, then always look first for a government intervention that knocks those incentives off line. It’s not hard to find some culprits.

One bad move has government legislators and courts intervening to slow down mortgage foreclosures because it is socially unacceptable for people to lose their homes. Unpleasant yes, but unacceptable no. Start with this assumption: Individual tenants can be evicted at the termination of their lease. Only the ardent defenders of rent control (which has ruined New York City real estate markets) find this outcome is unacceptable. Everyone else rolls with the punches.

So what is the difference between the evicted tenant and the foreclosed owner? Only this: The owner has put a down payment on the house. But so what? Foreclosed homeowners typically made only small down payments, or even none at all. Treat their mortgage payments as lease payments, and bump up their amount a bit by dividing the down payment over the number of months before foreclosure. Not much of a financial difference between the tenant and the owner.

Yet once regulators slow down foreclosures, other potential homeowners are denied opportunities to purchase housing they can afford. The housing stock cannot recirculate. Banks that acquired this mortgage paper see their portfolios nosedive. That dicey paper, as William Isaac noted in last week’s Wall Street Journal, drives the entire economy over the edge by strict government regulations that require all financial institutions to “mark-to-market” the various instruments in their portfolio.

Unfortunately, there is no working market to mark this paper down to. To meet their bond covenants and their capital requirements, these firms have to sell their paper at distress prices that don’t reflect the upbeat fact that the anticipated income streams from this paper might well keep the firm afloat.

One bad regulatory turn leads to another, and lo, the bailouts come thick and fast. At the nth hour, wise heads often rightly conclude that some desperate measure has to be taken to prevent the financial disintegration brought on by, well, prior government regulation. Those bailouts, of course, come from the hides of taxpayers who borrowed prudently. The entire system subsidizes destructive behavior, which means that we will get more destructive behavior in the future. We might as well sell flood insurance at bargain prices in Galveston, Texas, and New Orleans.

The moral of this story is that bad regulation metastasizes. Short term heroics are no substitute for dispassionate deregulation, which won’t happen so long as our political leaders are fixated on greed. Taking steps to prevent financial meltdowns is more likely to hasten their unwelcome arrival, so says the libertarian.

Richard Epstein writes a weekly column for He is a senior fellow at Stanford's Hoover Institution and a professor of law at the University of Chicago.

Is Conservation Good for Us?

For years now we've been hearing an ever growing chorus about the need for conservation. Lately the cry for recycling, using less plastic, less water, less fuel, etc. is deafening. As the volume has increased, I have grown more and more uncomfortable with this whole idea of conservation. Something just didn't seem right about it.

Whenever "everyone" is saying something I start looking for the angle. I've come firmly to the conclusion over the years that the politically correct position always has a fallacy at its core. Political correctness is a technique used to pressure people into doing something they wouldn't do on their own or isn't in their best interest. So I've been searching for that fallacy in politically correct conservationism. Here is what I've realized.

At the core of the conservation argument is the idea that mankind harms the earth by the consumption necessary in everyday living. I have long been aware of the left's belief that humanity is a parasite on the earth. In their opinion, if it wasn't for mankind, the earth would be a beautiful, pristine place. You can see this premise on display in the History Channel's recent production "Life After People" or the National Geographic Channel's "Human Footprint."

There are two aspects this position. One, that we are raping the earth by harvesting natural resources and that two, we pollute the earth when we consume them. I contend that both premises are flawed.

Resources are product of humanity, not the earth. Sure, resources come from the earth, but they are useless to us until someone converts them to a useful form. Oil was an annoyance to land owners until a human being discovered it could be used for fuel and learned how to convert it into that useful form.

This is why the "population alarmists" have it all backwards. We need more people, not less. Humanity is the world's greatest resource. The greatest threat future western nation’s face is declining populations. None of them are reproducing and are no longer having children at replacement rates.

So why conserve oil? Oil has completely changed the quality of life for millions! It has done so in every way conceivable. Every aspect of our lives is better because of what the energy in oil is able to do for us. Here is the only reason I know of to conserve oil: you want to reduce the amount of money you spend on it. For me it is a purely financial decision. As far as I'm concerned, if you have decided that consuming energy is more valuable than the money in your pocket - then you must have determined that it will improve your life or the world around you to some degree more than the money was worth. Because consuming energy has a cost - it's use must have a tangible benefit to people or else they would save the money and use it for other purposes.

The critic of my position will no doubt say that people should use less because of the resulting pollution. (The other half of the "humans are destroying the earth" premise). I believe this premise is flawed as well. Pollution is not a product of consumption; it is a product of poverty. Prosperous, free people want to live in clean environments and they will pressure polluters using any means available (product boycotts, government action, picketing, etc) to clean up their act. Compare the environment in any free, prosperous country to any socialistic, non-free country. Athletes don't even want to compete in china due to the dirty air. Poor people care about eating - prosperous people care about everything else. PC Conservationism, if it had its way, would ultimately do more damage to the environment by spreading poverty.

When we decide to conserve, we're actually saying that we will deprive another human being the opportunity to provide us with that service or product. I don't think anyone wants the public to be pressured into not to buying their product. I don't want people to conserve when it comes to the services I provide. The price and your budget will force you to conserve appropriately. If you can afford something and have determined that your life would be better off if you had it/used it, then buy it - don't let the PC police deprive you and the seller of the benefit of the exchange.

PC conservationism shames people into avoiding consuming, which really just means, stop putting your fellow man to work. Furthermore, it demonizes the people and companies that transform the world from a wild and savage place into a comfortable and enjoyable place to be.

The beauty of the free market and freedom in general is that even the laziest man is required to serve his fellowman in order to provide for his basic needs. Our hunger drives us to serve our fellowman, and the needs of our fellowman that we are able to meet with our skills, energy, and resources provide the income that satisfies our hunger.

But if you have served your fellow man, made your money, then you should feel free to use that money in whatever way you see fit. I personally give a set percentage away, save a set percentage for the future, then use the rest to provide for my family's needs and bring pleasure to our lives. The consumption I engage in at that level is healthy and right. It puts people to work providing the services that I consume.

I am not going to be guilted by the PC Conservation Police to use some resource less than my finances allow based on their belief that I'm destroying the world.

Why Democrats Will Never Support Drilling

Why do the democrats fight every single approach to lowering the price of energy? The cover of USA Today gives the answer in large bold print - "Drivers cut back by 30B miles." That in a nutshell is why you'll never find a democrat doing anything to lower the cost of driving. They don't care about what the poor pay for gas, they don't care how much high gas prices affect the price of everything else you need.

The democrats don't want you driving! They don't want you traveling! They don't want you to have a car! They don't want you buying airline tickets. Stay home. Plant some tomatoes or something.

Democrats want high energy prices. They think Americans use too much energy. They will do anything they can to drive the price up so that we get out of our cars. Their religion of global warming has convinced them that any normal human activity is destroying the environment. Since they haven't been able to convince the voters to let them ban travel entirely (like was done in the Soviet Union), they do an end-run on travel by making it so expensive that people voluntarily give up all but the most necessary travel. Democrats are celebrating because the high cost of fuel is finally causing Americans to get rid of their SUVs, causing them to take the train, causing them to get jobs closer to home, etc. They love the high price - and they love the result.

That is why every democrat solution to the high energy costs only raises energy costs. Gas prices are high - "we must pass a windfall profits tax on the oil companies!" Natural gas prices are skyrocketing - "keep our huge natural gas reserves off limits to drilling!" Electricity is more expensive than ever -"Just say No to Nuclear!" Food prices are out of this world - "We need more ethanol!" They actually use the anger over energy costs to gain the political support necessary to do more damage! And many Americans gullibly urge them on.

We actually don't have an energy crisis, we have a regulatory crisis. We've got enough energy for 150 years of abundant, cheap energy, right here in America - but our politicians have made it impossible to take advantage of it. The latest mantra is "We can't drill our way out of this energy crisis." As if saying the exactly wrong thing with conviction will make believers out of skeptics. Drilling is EXACTLY what we need to do. Energy is expensive because we don't have enough of it. This isn't complicated. In a free market, prices always move to bring into equilibrium supply and demand. Supply is low, demand is high - prices go up. We need more energy. We need to drill now. We need to build nuclear power plants.

Actually "We" don't need to do anything. These things will happen automatically if our politicians would just get out of the way! What "We" need to do is come down on the politicians until they cave in.

The thing that gets missed in all of this, by both the left and the right, is the benefit to humanity of mobility. People are willing to spend hundreds of dollars a month on their automobiles and fuel because there is GREAT, GREAT benefit in being mobile. You can drive to a job that is better than what you might be able to find within walking distance of your home. You can shop at a greater variety of stores - thereby increasing competition among those stores which increses quality and reduces price (if you are bound to the store within walking distance, they don't have to fight all that hard for your business). You can increase your business prospects, doing business with a greater circle of people. You have a wider range of dating options for the single person. A wider range of educational options. Automobile means self-movement -> Auto = self, mobile = movement. Self-movement changed America. It is good for us and our standard of living.

Aviation does the same thing nationally and globally. Shipping does the same thing with heavy materials. The ability to move ourselves and our things has done more to increase the standard of living in the western world than almost any other thing (telecommunications and effective currency are way up there too).

Mobility is ultimately about relationships. People need people. As we increase our circle of personal and business relationships - we gain access to the people who can solve the problems in our lives - whether by trading with them or talking to them. Mobility gives us access to these people.

Republicans should be standing up for freedom in the form of mobility. This is a defining issue and needs to be clearly articulated - but it is being missed unfortunately. The conservation debate is a false argument and we shouldn't be having it on their terms. Conservation is the new political correctness to end freedom of association.

Ultimately, that is what the energy debate is all about. Democrats have bought into the notion that normal human activity - people doing the things that make their lives better - destroys the earth. America was founded by people who wanted the freedom to do that which made life better. Democrats do not want us to have that freedom. And if they can't take it from you by fiat -they'll price freedom out of your reach.

The Mortgage Lending Crisis

About two years ago I moved to Long Island. At that time everyone was talking about the sky high prices of homes. The typical 3 bedroom 2 bath house in livable condition started at about $400k. I needed a house, and the prices were daunting. I came to Long Island for a pretty good job with better pay than my previous job. I knew the prices would be a lot higher than Tulsa, where we had moved from, but wow! I had sold a nice house for $150k and would have to spend over $400k for less house. The pay increase felt more like a pay-cut.

I remember talking with a friend about the "outrageous" housing prices on Long Island. We had both recently heard a news story about how young men and women were moving away from Long Island after they graduated high school and college and had to move out of their parents homes. Until you make about $120k a year, its almost impossible to buy a house here. Older families were cashing out and moving to North Carolina - younger families were simply leaving in search of something they could afford.

People were angry in many cases that they couldn't afford their homes. I spoke with a fellow pilot about his circumstances - wife, 3 kids, and a house payment that was killing him. He wanted to blame someone for how high prices were and just didn't think it was fair.

Now the lament is exactly reversed. Housing prices are "crashing! The Government must do something!" But wait - 2 years ago we were all complaining about unaffordable housing - now we're upset that housing is becoming more affordable? One man's feast in this case is another man's famine. Before it was a crisis if you were a buyer, now its a crisis if you're an owner. Hey people, its not a crisis, its the way things work.

This highlights for me a sad underlying reality. Politicians will make a crisis out of every change that makes news. If the prices are high (or rising), the politician will blame someone, propose a "solution" that increases his power while burdening the taxpayer and creating dozens of unintended consequences that hurt us all. If the prices are low (or falling), the politician will blame someone, propose a "solution" that increases his power while burdening the taxpayer and creating dozens of unintended consequences that hurt us all. See a pattern here?

What saddens me most of all is the fact that this housing/mortgage "crisis" was created by government in the first place - one of the unintended consequences of political action intended to help the victim of a previous crisis. The Community Reinvestment Act of 1977 was passed because some borrowers couldn't get home loans. They weren't credit worthy, lenders weren't willing to throw away their money. Politicians didn't think this was fair that some people could get home loans and others couldn't. So they forced banks to extend loans to a broader customer base - now people could get loans who shouldn't have had them.

This worked okay for many years because housing prices were generally increasing. Then memories faded of the risks associated with taking huge loans and lenders and borrowers alike went crazy. Principle only loans, balloon loans, ARMS coupled with huge profits with house flipping, etc - and everyone lost touch with reality. "Hey, its a party, come on in, nothing can go wrong!"

We are reminded again that there is no free lunch. Buyers could only hang in there for so long and eventually people stopped buying. Remember - high prices are meant to do that - discourage buying when supplies become limited. So the market corrected. Prices are coming back to a more affordable level, lenders are "remembering" what they knew so well before - that some people don't pay back their loans and consequently shouldn't get loans.

Ah, but what about the politician? This is his big chance to do something. "People are hurting out there! They need help!" So now they want to violate the contracts that lenders signed with borrowers and force the lenders to be more "forgiving." Isn't losing billions to bad loans "forgiving" enough? A primary moral function of government is to enforce contracts between parties - but like so many other principles that modern politicians have abandoned - they are doing the opposite of the moral function of government.

We now hear talk of stimulus packages and bailouts. Senator Chris Dodd wants the government to buy up the bad loans. Senator Clinton wants government to take a more active role to "prevent excesses of the market." Wow! The unintended consequences of government action at this time will be painful - possibly devestating. It might not be immediate, but you can bet in the long run it will hurt the very people it was intended to help - and the rest of us even more.