Of Proposed Laws and Reading Them

Would you trust someone who presented you with an offer that sounded too good to be true, who showed you a contract several thousand pages long, and who said that you do not need to read it because he will explain it to you? Would you trust him with your life, and your way of life? The contract involves surrendering to him your responsibility for making many of the important decisions regarding your healthcare, your use of energy, and your choice of financial products, including checking and savings accounts, loan programs, and how you choose to pay for things. And, by the way, you need to make your decision right away, because, well because he says so, the sooner the better.

Sounds like a flim-flam artist to me. That is not the way that an upstanding businessman, genuinely confident in his product, would likely do business. Makes you wonder about the promises. Will they stand up to close inspection?

That is the deal that the Obama Administration, however, is offering to the nation, proposals that reach from decisions affecting health and life itself, to the details of how we live that life (anything that uses energy), and how we use and manage our own financial resources to pay for things of daily life and prepare of the future. Unfortunately, you do not get to decide whether you take that deal. Your congressman and senators will decide for you.

Here is a thought. Since they represent us, why not insist that the congressmen and senators read the proposals before they vote on them? I worked on Capitol Hill for twenty years, and I can tell you that few congressmen and senators read most of the laws they voted on, and some laws were never read by any of them. For months, now, the Republicans have challenged anyone in the House of Representatives or the Senate to admit to having read the $700+ billion stimulus law passed earlier this year, passed in a hurry because the President and congressional leadership said that it had to be passed in a hurry. No one has come forward.

It does not require a lot of words to make theft illegal. But it takes a lot of words for the government to decide when you get an operation and under what terms, to come up with a fee that someone (you) will have to pay for any appliance that uses energy, or for the government to design your checking account and instruct bankers what they must and must not tell you about the government-designed accounts.

Most people are convinced today that our tax laws have become too complicated. The tax laws got that way when taxes were passed not just to pay for the government but rather were used by smart people in Washington to guide the behavior of people throughout the country, to affect how we invest, what we buy, and to shift wealth from one group of people to another group.

So, how about before our congressmen and senators surrender our control over our lives and health, control over how we use and pay for energy, control over the features of our bank accounts, we insist that they personally read the proposals? I know what the response will be from legislators and their staff. Remember, I used to work there. They will say that most of that language is technical stuff, details, fine print. They are mostly right, and I think that this may be the point. If the laws have become so complicated, requiring hundreds of pages of fine print and details, maybe something is wrong. Maybe the government is trying to do too much.

Of Freedom and the Bad Deal

Too many people in this country and elsewhere are making a Bad Deal with their government. Perhaps Americans have been slower to make the Bad Deal, because our nation was founded, and refounded with each new wave of immigrants, by people who were fleeing the Bad Deal in their own countries. The Bad Deal is, we surrender part of our freedom to our government in exchange for a promise that the government will remove from us some of the risks of our bad decisions.

Businessmen make good and bad decisions. With the good decisions, they provide a very popular good or service in exchange for which they make a lot of money. With the bad decisions, people either do not want the good or service or they can find it somewhere else cheaper. The businessman makes less money or may even go broke and lose his investment.

In most countries, that is considered too chaotic and disorganized. That is particularly so when it comes to big businesses. Even where such countries will let small businesses fail, they keep the big businesses propped up.

With the loss of the risk of failure, the benefits of successful risk taking grow anemic. The folks in the government providing the protection from failure demand a piece of the action. In the more clumsily corrupt countries, government officials take bribes or are directly invested in the protected business. In the more sophisticated countries, the process of “sharing” in the prosperity of the protected business is more camouflaged. There are special taxes and fees paid to the government, or the business is guided by the government into activities that benefit the current government leadership and its friends.

The housing loan giants, Fannie Mae and Freddie Mac, are examples of that in our country. They were created by Congress and given special privileges that stifled competition and lowered their costs, allowing their businesses to expand until they became two of the largest companies in the United States. Investors lent them an unending supply of money at very low interest rates on the assumption that the government would never let the companies fail. In exchange, Fannie and Freddie had very elaborate programs for making Congressmen and Senators look good in their districts, with fancy press conferences where Fannie or Freddie officials bragged about all the mortgages supported in the district and how important the Congressman or Senator had been to Fannie’s or Freddie’s success.

Fannie Mae and Freddie Mac gave up significant freedom of decision in their business plans in order to get the government protection. Their experience, though, demonstrates a central problem of the Bad Deal: while the government promises to protect us from consequences of our bad decisions, it does not protect us from bad decisions by government. At last the Fannie Mae and Freddie Mac house of cards tumbled down. It happened when the bad decisions urged on them by their government “friends” left the firms powerless to withstand the swirling winds from the air escaping out of the housing balloon. Fannie and Freddie helped puff up the balloon under government guidance together with other failed government programs. The firms failed, and the government had to take the companies over entirely.

Now the Obama Administration is offering to take over the consumer’s job of making his own financial decisions. They propose a new consumer regulator to stand in the consumer’s place, with the assignment to design all of the financial products that banks and other firms must offer to their customers. Normally customers and financial companies have figured this out among themselves in the market place. The Administration calls these new products (to be designed by a five-man board in Washington) “plain vanilla” products. The Obama Administration believes that simple is better. If you do not want plain vanilla, if you need a loan or a checking account or a savings account or a credit card with some extra features, good luck, because the new agency will be poised to pounce on any financial firm that dares offer it to you. It reminds me of the old Model T Ford. You could get it in any color you wanted, as long as the color was black. Thank goodness Chevrolet came along and offered blue, or we would never have had Mustangs.

Which again is the point: when government makes the decisions, there is little incentive for things to get better. In promising to eliminate your risk, the government does not want to risk some innovation going wrong.

Sure, businesses and consumers making their own decisions make mistakes. Then they learn from their mistakes, pick themselves up, and try again and usually do better. But Fannie Mae, Freddie Mac, the recent financial panic and the coming rise in interest rates and inflation, are a few near-term reminders of how government can make mistakes, real whoppers. Long experience over the centuries has shown that mistakes by the government are the bigger risk. When we accept the Bad Deal and surrender our freedom of action to the government, who will protect us from the government’s mistakes?

Of Washington Poverty and Market Growth

We are now well into the new year and even farther into the economic recession, and it would be hard to find people who think that things are looking better. The best you can find are those who will say that things are looking like they may soon start to look better, at least a little bit.

Unemployment continues to grow, with the best predictions calling for a turn around in 2010. The economy continues to shrink. Trade—imports and exports—is contracting. The number of bank failures has been growing in recent weeks. The stock market, after a hope-led surge in the Spring, is languishing. And the great State of California is bankrupt, literally bankrupt. It cannot even borrow money. The state government is making payments with IOUs—as long as people will accept them, and patience is running very thin.

We are now into a full year of trying to run the economy from Washington—stretching back into last year’s failed economic policies under President Bush and continuing at an accelerated pace under President Obama. Things have gotten progressively worse. Maybe it is time to admit that Washington cannot run the economy, at least not if you measure success by economic growth, business expansion, and generation of good (rather than make-work) jobs.

After one year of trying everything, if government-directed, Washington-led economic control worked, you would think that we would see strong evidence by now. The evidence is just the opposite. The job creation engines—business and investment—seem to be on strike. Or maybe they are just frozen out by government programs trying to take their place. With efforts to control all aspects of the economy, from taxes that reach to anything that uses energy, to proposals for government to “compete” with the private sector for health care (you ever try to “compete” with the umpires in baseball?), to plans to have brand new government agencies control the banking system (protecting the “consumer” by making consumers’ banking decisions for them), how can investors figure out where to place their money? How can businessmen make plans for growing their businesses?

The problem is not that the people in Washington are not smart. They are smart. They are just not smart enough. No mortal is. The economy of a great nation like the United States is far too complex for any small group of people to run it. It is impossible for them to know enough or to do enough. These smart people desperately pull on a handful of economic levers and hope to run the entire economic machine, always overlooking myriads of other important economic matters, and mishandling the levers that they can pull.

It is best to let the markets run the economy, the markets that efficiently take the billions of freely-made economic decisions of the whole population every day, drawing upon the combined knowledge of everyone, and turn them into economic growth and expansion. The interference of the government policies got us into the current recession, and the increased interference has intensified it. Now it is time to back off, and let the people make their decisions, all of the people, and watch this economy soar. That formula has always worked.

Of Organized Religion and Self Worship

It is not uncommon in American society, and likely in others as well, to hear someone say that he, “does not believe in organized religion.” The statement is usually intended as a conversation stopper, at which it usually succeeds, because it is not clear what is meant by the phrase. It is hard to continue a conversation on that basis.

If it means anything more than, “Leave me alone, and let’s talk about something else,” that is, if it is to be taken as intelligent, meaningful communication, then it probably means one of two things. It may be worthwhile exploring in further conversation which of the two meanings the speaker actually intends.

It could be that the speaker means that he believes instead in disorganized religion. It would be worthwhile asking if this is what he means. That would lead to further questions and discussion. If the speaker in fact does believe in disorganized religion, then it would be fair to ask what he believes in other than in himself. If he believes in the religious views espoused by some other person, that very agreement becomes the first step of organization, the union of belief by more than one person. Every organization is an agreement of two or more people on something, a plan, a program, a belief system. So a true believer in disorganized religion has to have a religion by, for, and of himself, or his religion starts to become organized. I am reminded of the animated Christmas movie, “Rudolph the Red-Nosed Reindeer,” in which Rudolph and a misfit elf agree to be “independent together.”

Alternatively, it may be that the speaker means to say that he believes in no religion at all, organized or otherwise. This view is in practice hardly credible. Few people if any have no belief about God and man’s relation to God. That includes those who assert either that God does not exist or that His existence cannot be known. Such a belief is a religious view about God and man, and one that involves reliance on some very fundamental theories that require more than evidence to believe. That is to say, for a thinking man, religious belief of some kind—some set of beliefs about God and one’s relationship to Him, pro or con—is inescapable. The question of the existence of God is fundamental. You either believe that He is or you do not, and that belief leads directly to a long set of follow-on beliefs extending throughout one’s approach to life. Sounds like religion to me. Atheism is a religion, and while atheists may assert that one cannot prove the existence of God (a claim I would firmly dispute) and therefore His existence can only be taken on faith, the atheist in turn fails to prove that God does not exist and can only support his belief in the nonexistence of God with something akin to what he would call faith.

The individual who says that he believes in no religion can seem to be very much like the one who believes in disorganized religion. He has his own religion by, for, and of himself—unless he belongs to some organization of other people holding similar beliefs about the non-existence of God, in which case he does believe in and belong to an organized religion after all.

Of course, the professed disbelief in organized religion could mean—and I suspect that it usually does mean—that the speaker does not prefer to affiliate with a group of people with similar beliefs if they have a formal or obvious system of organization. It is not really organization to which the person objects, but rather to particular forms of organization, to certain methods or formalities of organization.

If this is the case, then the speaker must fit into one situation or another. Either the speaker objects to more obvious organizational structures, because he prefers to be led along with as little perception of it on his part as possible—a kind of religious life with blinders on, involving some unadmitted surrender of freedom and will—or he prefers an organization that makes no demands on him, whether as to belief or conduct.

In the latter condition the person is once again little distinguishable from the believer in disorganized religion, choosing to be a god unto himself, a sole determiner of a religion by, for, and of himself. At this point I must add that how anyone can truly believe in a religion of his own creation is beyond my comprehension.

In some cases at least—and I think that these include the more part of the more honest in heart who claim disbelief in organized religion—those who say that they do not believe in organized religion may mean that they have yet to find an organized religion in which they can believe. This is a very different matter, and it is logically and religiously justifiable, if one does not cease looking before finding the truth.

This was the situation of the young boy, Joseph Smith, and of many others of his contemporaries. They held themselves apart from the various organized religions of their day, religions that claimed to worship a God whose teachings and commandments the religions did not follow and whose authority they did not possess. A fair analysis of the teachings and fruits of these religions could justifiably lead many an honest man to reject them and could cause hope to dim of ever finding the true and living God and His representatives on the earth.

To any such modern truth seekers I together with many others proclaim that God has revealed Himself to man, in modern times as in times of old. We announce that God has again called prophets and apostles authorized and empowered by Him, Jesus Christ, to endow all who will to enjoy the presence and influence of God and His full blessings. This God is a God of order, of peace, with all of His works and efforts organized for the blessing of His children in eternally meaningful activity in this life and in the life to come. This God is knowable, reachable by all who sincerely seek Him.

Of Recovery and Renewed Recession

The economic developments up to this early stage of the new year have reaffirmed the resilience of the American banking industry. After more than a year of recession, bank earnings are rebounding. Non-bank financial firms have dramatically declined or disappeared. Government bailout programs have come and gone in rapid succession doing little better than stimulating panic and sowing confusion among customers and investors—and wasting taxpayer funds. The vast majority of banks have survived all of that.

The early recovery of the banking industry this Spring was publicly interrupted by a set of phony stress tests, subjecting banks to evaluation under hypothetical future conditions that not even the Treasury officials who imposed the tests believed to be realistic. That is, they could not be expected to believe in the hypothetical conditions of the tests, since the conditions assumed that the Obama economic program not only would not work but would actually make things worse. For example, the hypothetical stress tests asked banks how they would do if loan losses became worse than at the deepest point in the Great Depression. We all must believe that the Treasury has better hopes than that for its own economic programs.

Even against those unrealistic measures the banking industry came off well. Despite the fear mongering of short sellers, the obtuseness of accounting standard setters, and the vivisection experiments of policymakers, the bank panic is over and the industry is poised for economic recovery.

The sky ahead, however, is not blue and cloudless. There are three major dangers on the horizon that could play havoc with the economy, the banking industry not excepted. The good news is, that all three are subject to government action. The bad news is that government leaders are showing little sign of even recognizing the dangers, let alone taking action to avoid them.

The three dangers are ballooning inflation, rising interest rates, and increased taxes. The three are related. Any one on its own could stifle recovery.

The Federal Reserve has pumped more than a trillion dollars into the economy, increasing the money supply dramatically. With fewer goods and services to buy with all that extra money we would be in a major inflation now if most people and businesses were not instead hoarding the money. Once coffers and savings accounts get full and people and businesses start spending again inflation can be avoided only if the Federal Reserve can mop up all that extra money and do so precisely as it comes gushing out into the economy. Success with such a delicate maneuver may not be impossible, but it would be astonishing.

The chief baggage from Federal Reserve efforts to reduce excess money supply is higher interest rates. High interest rates are both a tool for encouraging people to save their money rather than spend it, as well as a reflection that the program is succeeding in pulling money out of the system. But high interest rates also depress the economy, making business investment (think new machines and buildings) and consumer purchases (including houses and cars) more expensive.

Complicating this nearly impossible task for the Federal Reserve is the problem that the trillion dollar overspending by the Federal Government—well on its way to more than two trillion dollars—will be demanding hundreds of billions of dollars in borrowing from the public just when the Federal Reserve may be wanting to reduce the money supply. Foreigners are showing reluctance to lend to the Treasury, so domestic savers will have to choose more and more among spending their money, lending it to business, or lending it to the Federal Government.

Treasury debt auctions have already been soft. Interest rates are creeping up to keep Treasury debt attractive. The Federal Reserve may soon be stepping in to buy Treasury debt to keep the auctions from collapsing. If the Federal Reserve did so, it would be pushing more dollars into the economy just when it needed to pull them back to hold off inflation. The Federal Reserve would be in a no-win situation, and so would the rest of the country.

We could overcome both inflationary and interest rate risks to the economy by dramatically reducing taxes, particularly taxes on capital gains—making investment and new business activity more attractive by letting people keep more of what they earn. Instead, the Obama administration is proposing a host of major new taxes. Some are hidden as part of new environmental and health care programs. Others are more overt, such as plans to raise taxes on businesses and the wealthy, the very sources of job creation and investment.

The Franklin Roosevelt administration well earned the condemnation of history by taking a deep economic recession and making it last for a decade—encouraging enemies of freedom all around the world. President Obama would do well to avoid that example.

Of Bubbles and Treasury Debt

Over the last decade our economy has been buffeted by what appears to be an accelerating series of economic bubbles. It is more than coincidence that this has occurred while government interference in the economy has increased.

That is not to deny that free markets are fully capable of producing economic bubbles, as market participants miscalculate investment risks and rewards and copy-cat each other as they do so. These market participants, however, if left to their own devices will also pay the price for their mistakes. Knowledge that they are at risk acts as a moderator and corrector, limiting the degree of risk investors are willing to take in the first place (and the willingness of lenders to provide money to support the bubble), and leaving the way clear for other investors to come in and pick up the debris (at a profit) when the bubble bursts.

When government is involved non-economic factors are inserted into the calculation of risk, and they affect who pays for the risk. With the existence of federally-supported mortgage guaranties, investors paid very little attention to whether mortgage lenders verified the ability of borrowers to make payments. A government guaranty always means that risks will be undervalued and that someone else (usually the taxpayer) gets to pick up the tab for the miscalculation.

It is neither exaggeration nor hyperbole to recognize that for more than a year the government has been handing out guaranties at a rate never before seen in the history of mankind. That is to say, that mountains of financial risk miscalculations have been made and are being made every day, and the unavoidable consequences are accumulating.

Perhaps the most dangerous miscalculations are those involving the debt issued by the U.S. Treasury. Investors are mistakenly acting as if there is no risk in placing their money in Treasury securities. These investors overlook the risk that buying Treasury securities--with an effective interest rate of 4 one-hundredths of one percent (the rate last week for 1-month Treasuries)--puts investors at risk if interest rates rise even a little bit and exposes the investors to even mild inflation.

Inflation is unlikely to remain mild. Along with all those government guaranties there has been a mountainous accumulation of new money provided by the federal government. All that money has to go somewhere. Right now it is awaiting some slight shock to send it avalanching down on the economy. Much of that money is for the moment being hoarded by investors and businesses afraid to spend it or put it to work while economic prospects remain unsettled and policymakers keep confusing the markets with one economic policy, regulation, restriction, or plan after another. No one wants to play the game while the referees are adjusting the rules.

So the government money makers keep pushing more money out to fund investment even while they toy with new disincentives to investment. People park the money instead in bank deposits (which are growing at record levels) and Treasuries (driving Treasury interest rates down to almost nothing).

That will not continue. At some point, the willingness of investors to hold dollars in accounts earning practically nothing will have played out. They will get their fill of Treasury securities. Foreign investors are already there, in recent weeks reducing their holdings of U.S. Treasury debt. Treasury interest rates will have to rise to attract investors, but as Treasury interest rates rise those who invested in Treasuries at very low interest rates will be on the losing side of their investment. They will start unloading their Treasury investments, further driving Treasury prices down and interest rates up, causing even more losses to those who invested in recent months in the Treasury bubble.

The spiral will be hard to stop, particularly as the Administration will be desperately trying to borrow more money, unheard of new amounts of money, to fund their planned multi-trillion dollar deficits. Interest rates will have to go up very high very fast in order to fund that voracious new appetite of the government for debt. The high interest rates will choke off many new sparks of economic recovery, leaving a lot of money around chasing after fewer goods and services for sale.

The Treasury bubble will likely end in a race that we have not seen for more than a quarter century. The race will be on for which will go higher, inflation or interest rates.

Of Life and Resurrection

Recently I had some quiet time to enjoy a beautiful day, the kind of day that makes Spring famous. As I sat on my backyard patio, the sun was bright, the temperature cool. There was a gentle breeze. The air was fresh and alive. The early Spring flowers were blooming, the daffodils and the jonquils.

In the neighborhood the cherry trees and pear trees were in full bloom. Almost all the other trees were budding with the tender Spring green of their new leaves. The mix of scents from the trees, plants, and grass was pleasant and lively. The grass was greening from the Winter brown. I could hear the sounds of the songbirds as they seemed to vie with each other for lead solo in the wildlife choir. All was pleasant, charming, lively, as I sat taking it in while munching on some strawberries.

I should hate to give it up—the whole experience, the sight, the sound, the smell, the taste, the touch, not just the strawberries.

We live in a very physical world. God intended it that way. God went to a lot of trouble to create a very physical world. He took great pains to make it beautiful and lovely. As the Lord revealed to Moses, “And out of the ground made I, the Lord God, to grow every tree, naturally, that is pleasant to the sight of man; and man could behold it. (Moses 3:9) . . . And I, God, saw everything that I had made, and behold, all things which I had made were very good” (Moses 2:31).

In the Doctrine and Covenants, Section 59, we read,

Yea, all things which come of the earth, in the season thereof, are made for the benefit and the use of man, both to please the eye and to gladden the heart;

Yea, for food and for raiment, for taste and for smell, to strengthen the body and to enliven the soul.

And it pleaseth God that he hath given all these things unto man; for unto this end were they made to be used. . . (Doctrine and Covenants 59:18-20).

I am reminded of a song that was sung at our wedding reception, sung by one of my wife's college friends. Written and made famous by John Denver, it is called “Annie’s Song,” and it says in part,

You fill up my senses
Like a night in the forest
Like the mountains in springtime
Like a walk in the rain
Like a storm in the desert
Like a sleepy blue ocean

The Lord meant to fill up our senses, and He called it very good.

Did God make all these things, all the beauties of this earth, to be used by us only for life’s short day, to be laid aside forever when our bodies are placed in the grave? Once we die, are our senses never to be filled again? Is John Denver never to sing again? Will Helen Keller never see a sunset or hear a waterfall? Will little children who die in their infancy never run in the grass?

Apparently so, were we to rely for our light upon the religions of man. In the teachings of the religions of the world, the things of this physical world are temporary at best, frauds, a distraction from reality. In not a few teachings, this physical world is the sign of evil itself, wherein all things embodied are evil, and life is a quest to cast aside all things material and physical. For in the teachings of the world, God Himself is supposed to be without body, parts, or passions, a great nothingness to which we should all aspire.

Alone and apart from the religions of men and of the world, The Church of Jesus Christ of Latter-day Saints proclaims that God was not lying when He declared that His creation and all things He made “were very good.” As members of the Church of Christ, we announce that all that God does is eternal.

It would seem odd, indeed, for God to spend so much time and effort to create the world and the worlds—and all of their details and beauties—if they were not very important. In fact, the Lord emphasized just how important the material world is when He explained in the Doctrine and Covenants something about Himself and physical elements. God declared that, “The elements are the tabernacle of God” (Doctrine and Covenants 93:35), something that young Joseph Smith saw for himself with his own eyes, when the Father and the Son appeared to him in that First Vision in 1820.

Through the Prophet Joseph Smith the Lord further revealed, “The elements are eternal, and spirit and element inseparably connected, receive a fulness of joy; and when separated, man cannot receive a fulness of joy.” (Doctrine and Covenants 93:33, 34) So it was that the Lord explained to Lehi, the prophet, “men are that they might have joy. And the Messiah cometh in the fulness of time, that he may redeem the children of men” (2 Nephi 2:25, 26).

It is true that we shall all die, that we shall not only be touched by death but shall experience it, personally. A couple of years ago my son and I drove by a cemetery with what seemed to me an unusual sight. Lined up along the back were dozens of burial vaults, all waiting for their occupants, some day, sooner or later. Not one of us knows who will be the next occupant, but we cannot deny that we all will go there. There’s a place for us. But it is not the final place.

Those of us who have placed a loved one in the tomb, and have faced this one of life’s most real experiences, know that as we have faced this experience with the bright testimony of the Savior’s resurrection, the sting of death is removed. The sadness is one of parting, not the hopeless despair of irretrievable loss. With the Apostle Paul, we proclaim, “O death, where is thy sting? O grave, where is thy victory? . . . Thanks be to God, which giveth us the victory through our Lord Jesus Christ.” (1 Corinthians 15:55, 57)

The resurrection and all the good things of life that come with it are real. It is death that is temporary and fleeting.

So, for baseball games and walks in the woods, for ice cream and for spaghetti, for flying through the air and swimming in the sea, for symphonies and chirping birds, for soft warm blankets and cool smooth silk, for fast cars and slow buggies, for fireworks and handshakes, for the scents of the sea and the perfumes of the gardens I thank the Risen Lord and praise my Savior, for making all of these available forever.

We sing praise with the hymnist, Folliott S. Pierpoint:

For the beauty of the earth,
For the beauty of the skies,
For the love which from our birth
Over and around us lies,

For the beauty of each hour
Of the day and of the night,
Hill and vale, and tree and flow’r,
Sun and moon, and stars of light,

For the joy of human love,
Brother, sister, parent, child,
Friends on earth, and friends above,
For all gentle thoughts and mild,

Lord of all, to thee we raise
This our hymn of grateful praise.
(Hymn 92)

To which I add my own witness of the Living Christ. I have stood in the tomb. It was empty, for Christ is risen, as He said. And all good things by and through Him are saved.