Of Crony Capitalism and Free Enterprise

In 1991, after the fall of the Berlin Wall and as the Soviet Union was disintegrating, the current editor of The Wall Street Journal editorial page, Paul Gigot, warned,

Freedom’s main enemy now is the corporate state, private business harnessed to the coercive power of government.
(Paul A. Gigot, “Trade’s Hamlet: Will Gephardt Do The Right Thing?” The Wall Street Journal, March 8, 1991)

If that was true in1991, it is far more of a danger twenty years later. As a result of recent legislation, including the Dodd-Frank Act, the massive stimulus program, and the huge healthcare overhaul, involvement of government bureaucrats in private enterprise has never been greater in the United States, not even close. Federal officials are being endowed with enormous power in ways large and small to reward favored businesses and punish those that are not so favored, all hidden under the camouflage of acting for the “public good.”

Under Dodd-Frank, for example, federal regulatory czars are given authority to decide what lines of business financial firms can or cannot engage in, what services they can offer to customers, how much they can pay their employees, which firms will be bailed out if they get into trouble, what information private firms must provide to federal operatives, and who gets to foot the bill for all of this federal intrusion. Similarly, under the stimulus plan, hundreds of billions of dollars in federal contracts are up for award under the skimpiest of criteria, while under the new healthcare system myriads of government boards will decide who can receive what medical services at what cost and under which conditions.

It gets worse. Because these government benefits or penalties can be exercised with broad discretion by government officials, staying on the good side of the federal task masters becomes very important. Paying attention to the views and interests of government officials in other matters, even those not directly related to the legislation, can become the key to success or failure for a firm. Certainly complaints about the exercise of government discretion will not be well received. This is not hypothetical. Already it is the rare bank that will publicly complain about a decision by the FDIC, and securities firms are noticeably shy about taking issue with decisions of the Securities and Exchange Commission.

This ability of government authorities to employ the force of government to help friends and penalize perceived enemies, and to use economic levers to do so, is called crony capitalism. Crony capitalism unfairly gives capitalism a bad name. It is Third World-like. It is also old fashioned; it is pretty much the way that kings and czars ran their economies. Free enterprise and free markets will always be at war with crony capitalism.

Under crony capitalism, ownership of business may remain in private hands, but private owners share control with influential public officials. It can pay off big time for a business to get and stay on the good side of these people—whose permission and authority are keys to the success of the business. With government favor, a firm not only can win government business, but rules and regulations can be written in ways that favor the firm and disadvantage competition in the private sector. A new upstart in an industry can find trouble getting licenses, experience delays in regulatory approvals, be subject to heavy paperwork demands, face onerous financial fees and requirements, and through a myriad of techniques find his business handicapped in ways not experienced by firms in favor with federal officials.

Crony capitalism not only corrupts the relationship between businesses and the government; it corrupts the relationship between businesses and their customers. Under free capitalism and free enterprise the marketplace is the arbiter of which products and businesses succeed or fail. The multitude of individual people in the marketplace, through their multitude of individual purchases and other economic decisions, are the ultimate judges of economic success. That is to say, that customers have the ultimate say over which firms are the winners and losers, which in turn makes them, the customers, the winners from a vigorous competition among businesses to please them. It takes protection provided by the government to shield an inefficient business from the discipline of customers and markets, and that is what crony capitalism provides.

Under crony capitalism, judging winning and losing is taken away from the market place. With success derived from the ability of businesses to curry favor with government leaders whose hands are on the economic controls, it is no surprise, then, that the growth of government interference has stimulated a dramatic growth in the need for businesses to have representatives in Washington to plead their cause. Fortunately, that right of representation is enshrined in the Constitution. But it would be a good idea to reduce its necessity by re-enthroning markets and the consumers behind them as the final judges in the economy and return our government to preserving life, liberty, and the pursuit of happiness.

Of Churchianity and Priestcraft

While driving to church meetings this past Sunday I was surfing through the radio stations to find something wholesome and uplifting, in keeping with the spirit of the Sabbath day. That is not so easy to do. At least, I seem to remember that when I was a child Sunday morning radio and even television were almost reserved for worship programs. It is easier today to find politicians and sports figures—and their commentators—on Sunday morning radio and television; I will leave it to you to conclude whether those are the new predominant objects of worship.

With a little persistence I did find a couple of programs on the AM dial, and their messages were memorable. The first featured a religious figure with a call-in talk show in which he gives religious-psychological counseling to troubled callers. The one example I heard was from some woman who was living with a man, the father of at least a couple of her children, who was now involved in a sexual affair with some other woman. The caller wanted out of the relationship, but she was dependent on financial support from the non-husband father. She felt trapped, and indeed she was. The host of the program gave what seemed to me some sensible advice, which he admitted was common sense counsel that just about anyone could have given to the woman.

After that point I guess that the caller line must have thinned out, because the host proceeded into a prolonged criticism of organized religion, what he called “churchianity.” He took pride in the fact—pride is the right word—that he was not associated with any particular religious denomination. His argument, to sum it up, was that Jesus did not belong to any church and did not form any church, that He just went around counseling and helping people and then moved on. As the host explained, some people “fell away” but others “made it.” The host complained that organized religions are just businesses, and people do not need them. He took a while to say all of this, but that is the gist of it.

It is a wise practice to consider that in every criticism there is at least an element of some truth, and it would be wise to look for it and profit from it. The kernel of truth, however, does not justify accepting all the rest, any more than the bait justifies swallowing the fisherman’s hook. The churchianity critic is correct that too much of religion today, as was also found anciently, is a business. Paul and his missionary companions were menaced by mobs in Ephesus when his preaching of the resurrected Jesus Christ threatened to upset the business of the idol makers for the cult of the Greco-Roman goddess Diana. Martin Luther was driven to his break with the Roman Catholic Church in great part due to the church’s apparent selling of forgiveness. The Prophet Joseph Smith was martyred in Illinois by a mob inspired by local clergymen worried that restoring the ancient church of Jesus Christ was threatening their trade in manmade religion. And there is no lack of examples today of preachers seeking popularity for praise and profit.

It is true that Jesus Christ never intended His religion to become a business. He railed against professional preachers who made a business out of salvation. That is called priestcraft, and it was the leadership of the corrupt priestcraft of His day who conspired to have Jesus crucified. It is wrong, however, to conclude that Jesus Christ did not establish a Church. As Jehovah of the Old Testament, Jesus Christ called prophets and priests, had them ordained under divine commission, and by revelation instructed them on their duties. You have to overlook much of the books of Moses and reject Moses himself not to acknowledge that.

Similarly, during His mortal ministry on the earth, when the priesthood among the ancient Jews had become corrupted and turned into a business, Jesus Christ withdrew his authority from the old priests and established a new Church, with apostles and prophets. Observe how the Apostle Paul described it to the members of the Church of Christ in Ephesus:

Now therefore ye are no more strangers and foreigners, but fellowcitizens with the saints, and of the household of God; and are built upon the foundation of the apostles and prophets, Jesus Christ himself being the chief corner stone; In whom all the building fitly framed together groweth unto an holy temple in the Lord: In whom ye are also builded together for an habitation of God through the Spirit. (Ephesians 2:19-22)

I am not sure how more clearly Paul could describe an organized religion, “the building fitly framed together”. If Jesus Christ did not build a church, then what do we do with the apostles whom He ordained, and the Seventy whom He called to assist the apostles? In fact, without the Church of Jesus Christ, we would not have the scriptures that tell of His ministry nor the spreading of the gospel of Christ throughout the Roman world and beyond.

It would perhaps not be inappropriate to mention at this point that the churchianity critic concluded this portion of his commentary by mentioning that regular payments from his listeners of $5 and $10 would allow him to continue his campaign against the business of religion. In another post I may discuss the other program I heard yesterday, where the announcer offered the exact date of the Judgment Day.

Of Service to God and Service to Ourselves

In a particularly entertaining passage in The Hobbit, by J.R.R. Tolkien, Gandalf the wizard employs a clever and amusing tactic to introduce his destitute group of fifteen wanderers to the powerful and reclusive character, Beorn. As the story goes, each wanderer upon introduction and according to his custom offers to Beorn his name along with a pledge of being “at your service!” The rather impatient but also self-sufficient Beorn replies, “I don’t need your service, . . . but I expect you need mine.”

That is not unlike our relationship to God, even as we offer Him our service. God the Omnipotent has no need of our service, but we are very much in need of His, all day and every day. A difference, and important difference, is that while God does not need our service, we need to give it.

We need to give our service because of what giving does to us, especially what it does to us inside. It is the inner man that concerns God and is the reason for which He created this brief mortality that we sometimes narrowly call “life.” Our mortal life was designed by God as an opportunity to shape and develop our character for our permanent life of immortality, after our death and later resurrection. That concern for the inner man was behind God’s teaching to Samuel the prophet when Samuel was looking for a new king to govern Israel.

But the LORD said unto Samuel, Look not on his countenance, or on the height of his stature; because I have refused him: for the LORD seeth not as man seeth; for man looketh on the outward appearance, but the LORD looketh on the heart. (1 Samuel 16:7)

Our inner life changes for the better each time we do good, with each worthy service that we provide. It constricts with each mean and sinful act. In the words of the modern prophet, Spencer W. Kimball,

the more we serve our fellowmen in appropriate ways, the more substance there is to our souls. We become more significant individuals as we serve others. We become more substantive as we serve others—indeed, it is easier to “find” ourselves because there is so much more of us to find!
(Spencer W. Kimball, “The Abundant Life”, Ensign, July 1978, p.3)

A couple of simple examples may illustrate how actions can change us. In these examples we consider apparently identical actions that differ only in terms of the intent behind the actions. That intent, expressed through action, rebounds on the soul and changes the character of the soul further, for better or worse.

Consider, for example, a man who accidentally walks off with someone else’s umbrella. Compare that with a case where another man knowingly takes someone else’s umbrella. In both cases the actions in all material details are the same. The umbrella leaves in the hands of someone who has no right to it. There is a profound difference, however, in what each case does to the character—the internal moral condition—of the actor. The first may cause some embarrassment but is scarcely a cause of shame. The second has at a minimum increased the willingness of the man to cause yet another injury to the property or person of someone else and has shrunken him in spirit and in love for his fellowman.

As a second example, let us look at a seemingly good act, the giving of a gift. With a gift freely offered, with thoughtfulness and generosity, the giver grows in characteristics of kindness and liberality. The same gift, however, given grudgingly, with hopes of currying favor or with a sense of obligation rather than goodwill, with residual covetousness for the possession surrendered, will stir resentment, envy, and perhaps even elements of hatred in the heart of the giver (see Moroni 7:6-11). Again, an action apparently the same in all material aspects becomes a blessing or a cursing to the actor depending on whether it was offered with a blessing or cursing in the actor’s heart.

All of that is to say, that we need to provide our service to find out who we are or, better said, in order to become who we will become. Genuine service, given from love for our fellowman and an even deeper love for our God, born out of our heartfelt esteem for the worth and value of God and for the potential of His children, unfailingly builds our own value, our own worth, and our own potential as the children of God. God our Father does not need our service, but we need to give it as an essential way of becoming like Him, the sons becoming like the Father by imitating His example.

Of Wise Men of the East and Wise Men of the West

Who were the wise men of the east? Where did they come from, what did they know, and how did they know it?

The scriptural account of the visit of the wise men to the young child Jesus is a reminder that Christianity is not a regional religion derived from the cultural heritage of a small group of people in a small corner of the world. The sociologists and others who see religion as nothing more than a human creation would have trouble explaining how people in widely scattered parts of the world, with little or no communication with each other, have come to bear the same witness of the Savior of the world, born near Jerusalem.

This was no mystery to the prophets of the ancient Americas. One of these, named Alma, wrote, “For behold, the Lord doth grant unto all nations, of their own nation and tongue, to teach his word, yea, in wisdom, all that he seeth fit that they should have” (Alma 29:8). That is to say, that the gospel of Jesus Christ has been spread by God throughout time throughout all the earth in the proportions and forms that the various people of the earth were able to receive it. This accounts for the broad similarities in moral standards found around the world.

The vision of some was particularly clear and strong. The wise men are one example. Traveling from somewhere in the “east” where their knowledge of the Jews and of the Kingdom of Judea was limited, they knew enough to go to Jerusalem to find where the “King of the Jews” was born. It was evident that they did not have in mind a mere earthly king, for they came “to worship him.” (Matthew 2:2) The people of Judea did not worship their king, so why would anyone else? The scripture makes it clear that the wise men were seeking the Christ (see verse 4), the King of the Jews of prophecies such as Isaiah’s:

For unto us a child is born, unto us a son is given: and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, The mighty God, The everlasting Father, The Prince of Peace. Of the increase of his government and peace there shall be no end, upon the throne of David, and upon his kingdom. (Isaiah 9:6,7)

Where did the wise men obtain this knowledge of the Christ, this knowledge that He would be born in the land of Jerusalem,that He would be the King of the Jews (in a more than worldly sense)? Most of all, where did they obtain the knowledge that He would be the Christ, the Savior of the world, and a fit object of worship? Clearly they did not obtain this knowledge from the Jews of Judea. Perhaps they gained knowledge from elements of the House of Israel, already by then scattered throughout much of the world. But even if they received from scattered Israel the knowledge of the Messiah, from where did they gain the knowledge that He would be born in that day, knowledge that even Herod and his chief priests and scribes did not have? These wise men from a foreign land had sources of revealed knowledge from heaven, independent of the knowledge possessed by the people of Judea, yet confirming the testimonies of the Christ.

The wise men of the east were not alone. Their testimony was echoed by wise men from even farther away, by wise men of the west. The ancient American prophet Nephi received revelation from an angel about 600 B.C., ratifying the words of other prophets, that in six hundred years the Messiah would come to earth and would be called “Jesus Christ, the Son of God.” (2 Nephi 25:19) The descendants of those prophets, six centuries later, also witnessed unmistakable signs in the heavens, signs of the Savior’s birth, “and they knew that it was the day that the Lord should be born,” even though they knew it would happen in a land across the ocean from them. “And it came to pass also that a new star did appear, according to the word” of the prophets (3 Nephi 1:19, 21).

The Lord explained to that western prophet, Nephi, the universal reach of the knowledge of the mission of Christ, “Know ye not that there are more nations than one? Know ye not that I, the Lord your God, have created all men, and that I remember those who are upon the isles of the sea . . . ?” (2 Nephi 29:7). The testimonies of these wise men, east and west, have come together in harmonious witness.

As we sing songs about the wise men this Christmas season, remember the wise men of the east and of the west, and consider their independent testimony from far flung parts of the earth that Jesus Christ is the Savior of all mankind everywhere. They received their own revelations from the same God of heaven of the birth and mission of His only begotten Son, born in Bethlehem, near Jerusalem, but witnessed across the globe.

Of Carols and Carnage

Among the beautiful carols of Christmas there is one that surely seems odd and out of place. At least that is how I, as a young child, thought of it. The haunting melody is in significant measure responsible for its lasting popularity, but the words are anything but joyful for a joyful celebration. Rather than recount the birth of the Savior, Jesus Christ, the song expresses the inconsolable sorrow of a mother of Bethlehem mourning the cruel murder of her little child. Popularly known as “The Coventry Carol,” it includes these words:

O sisters, too, how may we do,
For to preserve this day;
This poor Youngling for whom we sing,
By, by, lully, lullay.

Herod the King, in his raging,
Charged he hath this day;
His men of might, in his own sight,
All children young, to slay.

Then woe is me, poor Child, for Thee,
And ever mourn and say;
For thy parting nor say nor sing,
By, by, lully, lullay.

The song helps retell the sad chapter in the story of the early days of the Savior's mortal life when jealous King Herod, fearful of even rumors of potential rivals for his throne, ordered the slaughter of all of the children in Bethlehem of two years old and younger. Sometime before, Herod had been advised by the wise men of the birth of the future King of the Jews. The wise men mistakenly thought that Herod would rejoice with them at the news of the birth of the Messiah and freely told him what they knew. Under cloak of feigned rejoicing, Herod sent the wise men to Bethlehem, the place prophesied in the scriptures as the city where Christ would be born. He urged them to report back when they found the child, that he might come “and worship him also.” (Matthew 2:8)

But worship was far from what Herod had in mind. Herod’s reaction was typical of many throughout history when confronted by the work of God. He saw only danger to his own power and sought to destroy God’s work if he could. The Lord warned the wise men, who avoided Jerusalem on their way back home. Herod struck out in anger and ordered the death of all of the young babies in Bethlehem. Again as throughout history, Herod missed his mark, for Jesus was no longer there. Joseph, warned by an angel, had taken his little family away to Egypt.

Among those who take it upon themselves to second guess God there are those who would question why God would save His Son, while allowing all those other children in Bethlehem to be slain. Again, these critics miss the mark. They get it wrong by failing to consider the whole picture.

God the Father did not spare His Son from the slaying of the children at Bethlehem. The unfair and cruel carnage begun in David’s city was finished on Calvary. Jesus’ life was spared only momentarily so that it could be offered as the last sacrifice for all. That seemingly doleful song merits an essential place in our Christmas celebration. It points us to the full meaning of Christmas as part of a story that winds through Bethlehem and leads through sorrow in Gethsemane to death on Calvary.

Importantly, the story continues on from there to a glorious resurrection morning on the third day. This saddest of carols reminds us that Christ was born to save us, in spite of the evils of the world that He most of all could not escape, a salvation that extends especially to the children of Bethlehem and to all of the little children of the world.

Of Thanksgiving and Light

Thanksgiving is one of my favorite holidays of the year. It is a warm, pleasant, kind, family day. Not surprisingly, it is a day of reflection for me, despite of—or because of—all the family and busy activities involved with the day. As busy as the day may be, it is for my mind and spirit a day of rest, a very family day, a day when all is right because the family is right. It is a day during which I reflect with gratitude upon how, through the blessings of God, I have been able to provide for my family and that we have been able to enjoy so many good things. We gather rich in the mutual affection we have for one another, comfortable in how pleasant it is to be in each other’s presence. It is very appropriate that we celebrate with a bounteous meal shared by as much of the family as we can gather and often with fond friends, representing the bounties that God has bestowed upon us in the previous months.

Thus in our home, Thanksgiving Day is a time of reflecting on the abundant blessings of the past. It also serves as a gateway to our Christmas celebration, in which we celebrate all of the good things of life made possible through Jesus Christ. On Thanksgiving night, as soon as darkness has descended, we turn on the outdoor Christmas lights for the first time of the season. There is the apple tree, shining in brilliant white lights in memory of the Tree of Life, which Tree is a representation of “the Love of God, . . . the most desirable above all things . . . and the most joyous to the soul” (1 Nephi 11:22, 23).

Beside that tree, red lights flame the upward and outward branches of a maple tree, symbolic of the tree of the knowledge of good and evil, in opposition to the tree of life. This illumined tree represents how by the exercise of our power of choice we also unleash our energy to become good or evil—and that we do not always exercise that power for good (see 2 Nephi 2:15, 16).

In the middle of the yard, our flagpole is transformed into a tall, narrow multilight cone topped by a bright white star of light, again representing a tree, our Christmas tree. This and the tree we decorate inside the house are bright reminders that through Christ we can obtain “every good thing” (Moroni 7:25), whether spiritual or material.

The doorway to our house is outlined with a garland of evergreen also illumined with light to proclaim to family or friends that they will find welcome inside. Similarly, our lamppost is trimmed with red and green lights as if to say, “Here we are, don’t lose your way. Come and celebrate with us.”

In many ways it is very appropriate that we initiate this holiday season with a celebration of gratitude. The spirit of gratitude is the foundation of humility, and humility is the first step to opening our hearts to receive the Christ. So bring on Thanksgiving, welcome the family and friends, and open our hearts and homes to Christ, who brings us every good thing.

Of Financial Panic and Lessons Learned

Late last month I met with a group of German businessmen. They were on a visit to improve international understanding through cross-Atlantic dialog. As you can imagine, they were most interested in how the economy was doing. The German economy is off to a quicker recovery than is the U.S. economy, but in all fairness the Germans have not had to overcome as much government help as we have (during and following the financial panic of 2008)—although they are very worried about having to swim while being chained to drowning economies like Greece and perhaps others of the European community.

Among the specific issues that they asked to discuss was the question, “Have we learned lessons from the recent world economic crisis?” As I pondered that question, I came up with a list of eight lessons that we perhaps have learned. There are certainly others you or I might add, but here are the eight lessons learned that I came up with at the time, in no particular order of priority:

1. Economic and financial models are not as good as advertised. Much of the financial regulatory program of recent years was based upon the notion that regulators and the firms that they regulated had come up with powerful models to identify how well financial firms and the economy were doing, models that could be relied upon to control the economy. In fact, confidence in models was so high, that policymakers were starting to rely upon them to help predict the future. It turns out that economic reality is far more complex than any models, regardless of how powerful the computers are that run them. Once again we have seen that no group of policymakers, regardless of how smart they are or how much information they have, can control the economy any more than they can control the weather, and we should not fault them for failing to do so. We can only fault them for trying.

2. Fannie Mae and Freddie Mac are not the best run companies in the world. This lesson seems so painfully obvious that it is hard to believe that there was a time when people held them out as examples for emulation of corporate and financial management. But that was their reputation. We now know that the government privileges that they enjoyed allowed them to become sloppy in many crucial ways, especially in the management of their financial risk.

3. The biggest risk to the financial system is regulatory risk. Nearly every one of the financial firms that were strongly “persuaded” by policymakers to take government TARP money suffered market and reputational damage from those investments far worse than any financial challenges that they had. Nearly all of the largest recipients of TARP money paid it back as fast as the Congress and the regulators would let them, at a very expensive rate of interest. While a few have complained of these and other regulatory costs, more would if they were not afraid of the danger of being sent to the cornfield if they did, so they just say that it is “all very good” as their highest new costs today come from government regulations.

4. Economic reality always catches up with you, eventually. By the laws of economics, housing prices cannot long continue to exceed the rate of economic and population growth, but during the housing bubble the myth was that housing prices do not go down, at least not by much and not for long. The same was said about oil prices, by the way, as they grew even faster than housing prices. All came down, and all who believed and acted as if they would forever go up paid for expensive lessons. The same lesson is true today about government deficit spending. In spite of economic reality, too many policymakers act as if there is no limit to how much debt the government can put into the market. That false notion will crash on the rocks of economic reality, eventually.

5. Accounting rules, especially mark-to-market rules, are highly pro-cyclical. Accounting rule makers are on a multi-year crusade to force all companies to value practically everything by what you can sell it for in the market place right now. That means that in times of exuberant markets everything will look great and better than it really is, transferring market manias onto the financial books of companies. It also means that in times of panic, all things will look worse than they really are, accounting rules making sure that panic prices are written onto companies’ financial books. Mark-to-market financial rules were the amplifiers that helped puff up the housing balloon, just as they helped feed the subsequent financial panic.

6. You can hide risk, mask risk, but you cannot avoid risk. All economic growth comes from someone taking a risk. There is risk in whether a new invention will be well received in the market place, or whether a new store will succeed in its new location, or whether the new employees will do a good job, and on and on. There is a natural human tendency to want to harvest the rewards of investment without being exposed to its risks. So people try to get others to take that risk, or try to pretend it is not there, but the risk will be there, and the less obvious it is the less likely that people will take precautions to manage it. The biggest problem from the housing boom was that people thought that building houses and lending people mortgages to buy them were riskless, when in fact they are loaded with risk. A variety of things masked that risk. When it finally asserted itself, people who thought that they had made no-risk investments panicked. The same is happening today with people who invest in “no-risk” government securities. You might be able for a time to hide the risk; you cannot avoid it.

7. Bad underwriting is bad. When a lender decides to lend money he first evaluates the ability of the borrower to repay the loan. That evaluation is called underwriting, it is the lender making the determination that the loan is a good investment. Lenders and others will make mistakes: borrowers will get into unforeseen troubles, their new invention might not work as well as thought, their business might face a new and better competitor, some tax or new regulation might eat away anticipated profits. The lender expects that some small portion of loans will run into repayment problems, and the lender plans for that by setting aside reserves for loan losses. But when the lender does not pay attention to the risks that he can see, then he engages in bad underwriting, and no amount of reserves can absorb those losses. Would we have had a housing bubble and then a housing crash if so many mortgages were not provided to people who could not afford the houses that they were buying? Not enough lenders looked carefully enough into that question.

8. Financial firms cannot long offer products that policymakers and the public do not understand. Recent legislation and regulations are aimed at curbing some of the most successful financial products and practices, largely because policymakers and the public do not understand them. In times of financial turmoil, policymakers look for something to do, and one of the first things that they try to do is stop what they cannot understand. The public is vulnerable to the rants of people seeking to deflect criticism from their failings to products or practices that the public does not understand. The credit default swaps market was one of the few financial markets that worked extremely well throughout the recent financial turmoil, never freezing up while other markets pretty much stopped. As another example, bank investments in the securities markets—other than loans—were an important source of diversified income for banks, helping keep banks afloat when bank loans were suffering heavily from people and businesses that defaulted. Recent legislation and regulations are placing heavy new burdens on these profitable activities, and in some cases banning them entirely, because policymakers do not understand them. Financial firms have to be more active in explaining everything that they do, or they will continue to find many of their newest and best financial activities curbed in times of regulatory fear.

As I say, you can probably add to this list, as could I. As I ponder now the question that the German businessmen put to me, the actual lessons that we have learned seem to me less important than whether we will remember the lessons.