Where is the Call for Faith--in God and in Freedom?

We’re going to start to see stability in the markets, and much less fear in the nation and the world, if, as and when we have a few leaders willing to start talking about—and shape their decisions in light of— the importance of faith in God, and faith in the resilience and resourcefulness of men and women living in freedom under God. This is at the core of America’s greatness. When we have lost sight of it, we experience declines in various ways. When we affirm it—as did the Founding Fathers, George Washington at Valley Forge, Abraham Lincoln on many occasions, FDR on the eve of D-Day, Ronald Reagan in winning the Cold War—we see free people rising to the occasion, no matter how dark it may have appeared at the time. And there’s no doubt the thought of the time viewed the pending ‘crisis’ as the worst ever seen up to that point in history.

Today we are hearing calls for faith in just about anything but God and freedom. We’re told with great drama and intrigue about official and unofficial meetings involving the Secretary of the Treasury, the Federal Reserve Chairman, the IMF, the World Bank, the ‘big’ bank CEO’s, automaker CEO’s and on and on. We learn of their brilliant designs for pushing all the right levers of monetary and fiscal policy and masterfully restoring the flow of credit, stabilizing the banks, and generally smoothing out the economy. Too many of us with enough education to understand preferred stock, warrants, dividends, voting rights, guaranteed inter-bank funding, FDIC insurance limits, etc., etc., revel in the opportunity to show that we’re as brilliant as the ‘masters of the universe’ that put it together by taking shots at this feature or that feature, and arguing the minutiae. Opportunities abound for 15 minutes of fame for economics professors on cable TV.

Yet so far all we’ve seen is a lot of ‘too little, too late’; two steps forward and three steps back; and a bunch of exhausted invocations of the word ‘unprecedented’.

A little old-fashioned God-fearing humility would go along way here. With due respect for the occasionally accurate use of the word unprecedented, the Bible chronicles just about all the catastrophes man can encounter or create. The form of those catastrophes may change, and certainly the rapid spread of information (and fear) to the far corners of the globe is a unique feature of this age, but to paraphrase the Preacher in Ecclesiastes, there really isn’t anything new under the sun.

Lending and borrowing isn’t new, and the right way to use it to create wealth and progress isn’t either. The lender’s need to know and trust the borrower, his purposes and promises, is fundamental; the borrower’s need to show the work ethic, integrity, and commitment to return the money in order to earn the lender’s trust is also fundamental. (Jesus’ parable of the talents comes to mind). But the US government, led by politicians who tend to think they are smarter than God, decided they could sidestep the fundamentals.

The smarter-than-God politicians looked at low-income people and decided that low income is an indication of an unfair society rather than any sort of reflection of individual work ethic, integrity, morality, education, or faith. The politicians decided that home loans should be essentially given to low-income people—i.e., instead of banks requiring a 20% down payment (which could only be accumulated through hard work and/or family support); they decided no down payment should be required and ordered banks to make loans covering 100% of the purchase price. Instead of requiring proof of a steady job and steady income, the politicians decided that welfare payments could be viewed as proof of sufficient income to obtain a 100% loan. Instead of normal proof of citizenship and tax-paying status, it decided not even social security numbers should be required—and there have been reports that as many as 5 million illegal aliens hold sub-prime mortgage loans. This was pure social engineering by smarter-than-God government, trampling on the fundamentals of how free lenders and free borrowers must behave in order to achieve the real benefits of commerce. Sure, greed and dishonesty by Fannie Mae and Freddie Mac executives accelerated the pace and increased the size of the problem, and greed and dishonesty among the politicians on the take with campaign contributions from these organizations didn’t help. They merely added gasoline to an enormous and already gas-drenched pile of dry kindling.

And so disaster has followed. The surprise ought to be that there is any surprise.

Yet where are we going for answers? Back to the same ‘smarter than God’ types that created the disaster. Where in all the bailout proposals is there any invitation to free men and women to be part of the solution? It’s all about government guarantees and government equity investments and government limits on executive compensation. It’s all about faith in government, not God, and restrictions on freedom.

What about no capital gains tax on the sale of residential real estate bought within the next three years? Think any private investors might come off the sidelines and mop up some of these properties? They would, and in doing so, they will put a floor on real estate values, ‘mark-to-market’ won’t remain such a vagary, and pretty soon the value of mortgage-backed securities will start to stabilize. There are dozens of other proposals like this that acknowledge and honor the fact that free men and women just might be smart enough on their own to help resolve this crisis, if the smarter-than-God types in government would stop trying to control everything and limit freedom instead of trusting in it.

Paul Gable

Posted January 12, 2009