January 15, 2009
Memory Loss Plagues Wall Street and Christians
Failure to remember leads to economic recession and spiritual lapses.
By Collin Hansen
Over the holidays, you probably relished how gas prices largely returned to "normal." Prices higher than $2, $3, or even $4 per gallon just seems so un-American. So why are national opinion writers so diverse as Charles Krauthammer and Thomas Friedman pushing for increases in federal gas taxes?
It seems Americans have returned to their old habits. Friedman notes that more Americans purchased trucks and SUV's than cars in December. This reverses a trend toward more fuel-efficient vehicles that extended back to February 2008. You should be able to guess by now how this scenario will play out. Bigger vehicles means more demand for gas, which means gas prices will eventually return to the levels we saw in the summer of 2008. But by that time, the momentum for alternatives to gas-powered vehicles may have stalled yet again, leaving American consumers and their government at the mercy of foreign oil producers. "Have a nice day," Friedman writes. "It's morning again - in Saudi Arabia."
Krauthammer observes that Americans pay 18.4 cents per gallon in federal taxes. Drivers in Great Britain, like those in many other European countries, pay nearly $4 per gallon in taxes. Americans would hardly relish a new tax whose effect they would feel so directly. So Krauthammer and Friedman each suggest an offsetting cut in payroll taxes. But what's the point, if the federal government will reap no new revenue from the increased gas tax?
The columnists believe higher gas taxes would permanently shift consumption patterns. The American government might as well take the lead in manipulating gas prices. Otherwise America's so-called allies will continue to offer the carrot and wield the stick in order to control the U.S. economy.
Why can't we just remember this destructive pattern and resolve to break it?
Why do we forget that we'll be kicking ourselves for buying a pickup truck we don't need when gas prices inevitably spike again? The answer must be intrinsic to human nature. Recall Israel's fits and starts in their efforts to obey God's commandments. Again and again they failed to remember how God had delivered them from Egypt and how he had punished their forefathers in the wilderness for their disobedience. Remembrance does not come naturally to us.
The capitalistic system is so effective because it accounts for human nature, namely self-interest. But the lack of memory is a thorn in the side of the market economy. Henry Blodget, a onetime Wall Street wizard, explains how in the cover story of December's Atlantic. Blodget argues that we will never be able to excise the pattern of boom and bust from the system, because investors who argue that "it's different this time" will always ride the boom's tidal wave to the pinnacle of their profession. Bears who deliver a prophetic word against the bull market, remembering previous busts, will lose their jobs for failing to maximize profits in the short term.
"Those are said to be the most expensive words in the English language, by the way: it's different this time," Blodget writes. "You can't have a bubble without good explanations for why it's different this time. If everyone knew that this time wasn't different, the market would stop going up. But the future is always uncertain - and amid uncertainty, all sorts of faith-based theories can flourish, even on Wall Street."
It doesn't help that top financial professionals rarely last in the industry past age 40, due to the intense pressures of performing on Wall Street. Thus, Blodget explains, surprisingly few top financial experts have actually lived through both booms and busts. He writes, "The bottom line is that resisting the siren call of a boom is much easier when you have already been obliterated by one."
There is no substitute for experience. Surely the economy would retain a steadier course if firms took the longer view and retained managers who were willing to buck the moment's conventional wisdom. But is there hope for avoiding the pitfalls even if you haven't experienced them? This was the challenge for the generations that followed the Israelites whom God delivered from Egypt. So when God delivered the Shema (Deut. 6:4?5) he also taught Israel how to remember his commandments. "You shall teach them diligently to your children, and shall talk of them when you sit in your house, and when you walk by the way, and when you lie down, and when you rise. You shall bind them as a sign on your hand, and they shall be as frontlets between your eyes. You shall write them on the doorposts of your house and on your gates" (Deut. 6:7?9).
We could learn from fellow pastors who have taken this command to heart by implementing creative, tangible ways to help their congregations remember the gospel and apply it consistently. We need fellow members of the body of Christ who will preach the gospel to us when we forget God's sure promises. After all, God has initiated a new and better covenant with the church through Jesus Christ (Heb. 8:6?7). "For this is the covenant that I will make with the house of Israel after those days, declares the Lord: I will put my laws into their minds, and write them on their hearts, and I will be their God, and they shall be my people. And they shall not teach, each one his neighbor and each one his brother, saying, ?Know the Lord,' for they shall all know me, from the least of them to the greatest. For I will be merciful toward their iniquities, and I will remember their sins no more" (Heb. 8:10?12, cited from Jer. 31:33?34).
If we forsake this promise, we abandon God's recovery plan for delivering us from spiritual recession. Thanks to Jesus, it really is different this time.
Collin Hansen is a CT editor at large and author of Young, Restless, Reformed: A Journalist's Journey with the New Calvinists (Crossway, 2008).
Posted by UrL Scaramanga on January 15, 2009
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Comments
Um, hmm, Mr. Hansen, may I be so bold as for you to take the time and investigate, not from a Christian perspective, but from a economic perspective the reason why we're up to our eyeballs in problems.
Here, I'll give you a boost, and hopefully Url will allow me this moment...
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242
Nice lil blog cast that will explain how all this started, followed by...
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1263
Which will give you a pretty decent perspective on what is going on.
And once you're done with that I would like to take this moment to introduce to Micheal Lewis. He would be the one who wrote Liar's poker.
Anyway, he has a wonderful article out on Portfolio...
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
For those of you whose ears ring with base language you might want to give Mr. Lewis's article a pass.
All in all Mr. Hansen the problem with the American Church has been the same problem for the pasty twenty years...unbelievable greed, insatiable materialism, and a loveless heart that seeks it's own self service.
That is the Church Mr. Hansen...your article rightly points out a visible symptom, but it is only a symptom of the disease of greed and materialism which infects the American Church.
Posted by: sheerahkahn at January 15, 2009
When was the last time your pastor sought to help you write God's laws on your mind and in your heart? From what I read consistently on this site, God's laws (Jesus said, "Do not think I came to abolish the Law... but to fulfill." Matt. 5:17) are the last thing most pastors want to discuss. Repentance; obedience; God's wrath; sin; oh, such unpopular topics.
As to the analogy of the gasoline prices, I would like to offer a slight correction to this statement, "The capitalistic system is so effective because it accounts for human nature, namely self-interest." While this is a true statement, evey other system of government does the same thing because all people are primarily 'self-interested'. That's what the sin nature is. It's just that in other systems such as communisim, socialism, monarchys, etc., one's self-interest is hampered by the self-interest of those who control the military. But self-interest is no greater here than in most other places.
Additionally, there is no pure capitalism going on in the U.S. today as government has regulated Wall Street and industry beyond anything the founding fathers ever imagined. One simply cannot blame capitalism for today's economic woes because our govenment doesn't allow capitalism to do it's job. Congress keeps messing up the natural ebb and flow of free markets. Not because they care about people or the environment as much as they care about the 'pretense' of caring (and they really care about getting re-elected). There's probably a spiritual analogy here but I don't know what it is.
Posted by: Melody at January 15, 2009
One significant problem I see with the heavy-handed attempt of the federal government to compel greener living is its consequence on the working poor. A gas tax is only an incentive to buy a new green vehicle if you have the disposable income to buy said vehicle. Many Americans do not. They're stuck with whatever gas guzzlers their meager wallets will allow.
I'm hardly working poor but I won't be buying a new green vehicle for years to come.
Posted by: Casey Taylor at January 15, 2009
Melody,
I don't mean to be here, I really don't, but I'm really surprised by the degree to which you come across almost as a caricature of a fundamentalist, in both a religious and a political sense. Not only do you opt for a hyper-literal reading of scripture - assuming, for instance, that nothing human beings do could possibly add to global warming, because God supposedly sends the weather as He chooses, but you then share with us here that you believe in the perfect working of markets when they are "free." I'm sorry, but this view is SO naive. To blame our current debacle on congress and its tendency to fiddle with markets - as opposed to the very opposite problem: a lack of regulation - is preposterous. Again, I'm not trying to be mean here, but I wonder, what kind of secluded little place do you have to live to come to these kinds of conclusions? I'd almost want to say you couldn't possibly believe your own hype but, sadly enough, I think you do.
Posted by: Darren King at January 16, 2009
David Brooks, another NYT columnist, just posted a column today positing that the current economic crisis should make us reconsider our understanding of human nature and psychology. Could it be that humans are not actually motivated by reason?
As is noted here, and as the biblical record shows, certainly not. We are "prone to wander," as the hymn says, both from God and his gift of rationality.
We do need constant reminders of the gospel - a daily regeneration of the mind.
Posted by: Stacey at January 16, 2009
Darren, I'm trying hard to see what your response to Melody has to do with her post. Maybe I'll see it later.
Everyone who knows anything about economics understands that Congress created the current debacle by trying to force mortgage loans to people who couldn't qualify for them. Every other action (including some bad actions taken by Wall Street) was a response to that initial error. Blather about "credit default swaps" and the like being the "real" problem which required more "regulation" misses the point that if loans were not mandated to people who were likely to default, there wouldn't be a problem with "credit default swaps." Other things were done that should not have been done, but NONE would have been possible without first having the pressure from Congress to make bad loans in the first place.
You speak as if you have great knowledge about economics, markets and regulation, and totally dismiss the role of Congress in causing the problem, except insofar as it didn't regulate enough. In that view, you go against economists both from "left" and "right" who have written on this.
Posted by: harmonicminer at January 17, 2009
Melody, when Collin said that capitalism accounts for human nature unlike other systems, I believe he meant "in theory." You're correct that all economic/political systems do so "in practice" because humans practice them; the difference between practice and optimistic theory is (obviously) where any system fails. So you're both right.
harmonicminer, do you have a liberal source which admits that? I would find that an intriguing read. What do they think should have been done? And how do they maintain their "liberal" status while accusing liberal policy of such a massive blunder?
Posted by: Chris (Jesdisciple) at January 24, 2009
Chris, our financial crisis doesn't exist in "theory", it exists in "fact". Capitalism, without government intervention and protection has a built-in 'risk-aversion' factor. Here's how it works: I have money to loan. You wish to borrow it. I look at your financial picture (income vs. expenses) to determine if it is worth the risk that you will not pay me back if I loan you the money. I decide (based on my past loaning experiences) that you are attempting to borrow more money than I think you can reasonably hope to repay and I either turn you down or decide to loan anyway, but because the risk is so great, I charge a higher rate of interest to protect my investment. We go merrily along and you either pay me back or you don't, but I chose to take the risk.
Enter THE GOVERNMENT. In their infinite wisdom (based on their complete lack of having been in business themselves) and their concern for the housing of their fellow man (whose vote they desperately want), they create two programs called "Fannie Mae" and "Freddie Mac" that pose as a kindly aunt and uncle who will tell me that I am no longer to be the one who determines who I shall loan money to. I must now make a loan to Mr. High Risk at a lower interest rate than anyone in the business would deem safe. "I'm out of here" I say. "I'll loose my shirt with those kind of business practices." Aunt Fannie steps in and tells me not to worry, "If Mr. High Risk defaults, we'll buy the loan from you with taxpayer dollars." Wow, I'm in business now because I have virtually zero risk. In fact, you don't even need to make a down payment. Just walk in the door of a brand new home, settle on the couch and make your payments (or not). What a country!
Posted by: Melody at January 26, 2009
yes, Chris (or jesdisciple) here's one:
http://tinyurl.com/ov3xy5
Posted by: harmonicminer at May 7, 2009