Just and Holy Principles

During the current financial “crisis,” I’ve thought a lot about the relationship between freedom and security. Free markets offer more opportunity for material prosperity than any other economic system. But with that freedom and potential for prosperity comes great risk, which means that economic security cannot be guaranteed.

When the economy slows down and people’s prosperity diminishes generally, and especially individually, people desire security, and some even demand it. They want government to step in and save them. They forget that though the risk associated with their freedom made their short-term setback possible; more importantly, it allows them to pursue and most often obtain long-term prosperity.

As Americans, we need to accept — even welcome — economic risk, especially when our immediate security is in question. It is that opportunity to pursue our happiness in the best way we know how that will make it possible to regain security.

Government can help us feel a little more secure, but that feeling is mostly false. Only we, through hard work and ingenuity, can improve and secure our own economic circumstances.

Rather than expect government to bail us out during tough times, we should endure challenges the best we can on our own; otherwise, when the storm eventually calms and the costs of government intervention are calculated, we’ll realize that some, or much, of our freedom is lost.

Paul Mero of the Sutherland Institute did an excellent radio spot on this topic, as it relates to LDS theology. It’s called “Is Freedom an Illusion?” You can read the transcript here.

What do you think?

High School Musical

Want to “stimulate” Utah’s economy? Perhaps convincing Hollywood to come set up shop here will do it. Then again, maybe not.

Utah Governor Jon Huntsman, Jr. wants to “put us on the map” by using $15 million in federal “stimulus” money to lure film producers to Utah. This amount would almost quadruple the $4 million currently appropriated to Utah’s Motion Picture Incentive Fund (MPIF).

How does it work?
The MPIF offers movie producers a 15% tax rebate (up to $500k) for dollars spent in Utah. To most people, this program sounds like a “win-win” scenario: producers save money by operating in Utah, and Utahns gain more jobs and increased economic activity.

The Governor’s Office of Economic Development (GOED) claims that in 2007 $1.5 million in incentives to the film industry created 744 jobs and left $17.6 million spent in Utah. This may or may not be true, but even if it is, this program has several defects.

Why is the MPIF flawed?
1. Solar stereos might sell better than movies. Why does Gov. Huntsman offer incentives only to film makers? Why not to producers of, say, soap, operas, totally dry umbrellas, solar stereos, or toilet roll hats? Simply because a business doesn’t produce films or is already located in Utah, it loses out on a generous 15% tax rebate. This gives one industry an unfair advantage over others. In a free market system, government doesn’t try to pick winners and losers.

2. Home-cooked meals usually beat ordering out. Ordering out-of-state mostly attracts businesses that are in Utah for the incentives. Should the incentives disappear, or another state make a more attractive offer, those businesses disappear from Utah. Investing in home-grown businesses that have Utah roots and hope to expand operations is far more productive. This approach is known as “economic gardening.” It treats in-state businesses as well as, or better than, out-of-state businesses, which reaps the greatest long-term economic growth.

3. Farmer Jim gets the shaft. The MPIF benefits some Utahns who work for visiting movie producers or who provide goods and services to them during their stay, but the rest get little to nothing. For example, the humble farmer in rural Utah helps pay for Hollywood-bound incentives through the tax system; and yet, he receives no benefit for his “contribution.” Farmer Jim can’t work for movie producers, he can’t sell them hamburgers and milkshakes during their lunch break, and he certainly never wants to watch High School Musical 1, 2, or 3. The program redistributes wealth from regular, hard-working Utahns to film production companies and people and businesses that interact with them.

Will Utahns stand on principle?
Utah legislators will likely soon pass S.B. 14, which would increase the tax rebate to 20% and could add $7 million more to the fund. This bill and the governor’s proposal should be rejected, and the MPIF itself should be dissolved. These efforts to gain a little more economic activity and tax revenue in the present will only retard future growth and create a more unfair business environment.

Finally, Utah government officials’ obsession with catering to Hollywood*, enhancing Utah’s image to outsiders, and increasing tourism, all at the expense of people who actually live and work in Utah, is troubling. They sacrifice principle — a level playing field for all businesses and individuals — for popularity and wealth.

What do you think?

* As evidence, I recently witnessed a member of Utah’s Legislature almost shed tears while thanking the director of GOED for allowing her children to tour the set of High School Musical and meet members of its cast. Such experiences should not affect her decisions in shaping public policy, but I’d be very surprised if they do not.

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” Preamble to the Constitution

Our liberty, and especially the liberty of our posterity, is in jeopardy. In general, Americans are becoming increasingly individualistic and short-sighted. Our concerns focus mostly on ourselves and less on our neighbors and on future generations. Our worthy pursuits of happiness for ourselves and for our families can quickly morph into selfish pursuits that bring unhappiness to others.

Putting today above tomorrow
Sometimes, we feel that our “entitlement” to certain rights or circumstances outweighs our responsibility to others in our community and to our posterity. Women want the right to have an abortion without regard to the rights of the person developing inside of them. Individuals want the right to marry a person of either gender and to adopt children without regard to children’s familial and social rights and needs.

We spew pollution into our air and water without regard to those who will someday inhabit the same land. We incur debt — personal and public — and other financial obligations without regard to who will pay for them.

For instance, 2.3 million American home loans foreclosed in 2008 because people borrowed more than they could afford. People buy cars, boats, vacations, huge flat-screen TV’s, and other goods they can’t afford. When they go bankrupt, taxpayers end up paying for their excess through government. This propensity for spending beyond one’s means extends to government.

“An unsustainable fiscal path”
Most state governments have massive debt. The national debt is currently $10.8 trillion. The U.S. Treasury has said that the federal government is on “an unsustainable fiscal path.” Because of entitlement obligations (Medicare, Medicaid, Social Security) and spending trends, the Treasury projects that the federal debt could reach as much as 170 percent of gross domestic product (GDP) by 2040 and as much as 600 percent of GDP by 2080. We’re committing future generations (without their consent) to pay for these obligations, and if they cannot, to deal with the repercussions of not being able to do so.

Yesterday, President Obama signed a bill that will cost taxpayers $787 billion. This amount is equal to $2,600 for every American, 1.3 times the cost of the Iraq War so far, and 1.7 times the largest federal deficit in history ($455 B in 2008) (read more).

Nobody seems to know how we will pay for this “stimulus.” And nobody can know if it will actually improve the economy. In my view, the “stimulus” might help the economy in the short-run but will probably harm it in the long-run. This new $787 billion debt, and the regulatory strings attached to it, added to the obligations we’ve already incurred, will stifle economic activity and bind down future generations, perhaps beyond their ability to set themselves free.

The spending must stop
Government is necessary. It is ordained of God. But the great expansion of government that has taken place under the leadership of both political parties, and that will likely accelerate under Mr. Obama, will destroy “the blessings of liberty” that our posterity deserves. Even the Constitution, “the most wonderful work ever struck off at a given time by the brain and purpose of man”, cannot save us from our spending spree. Our short-sightedness, craving for constant security, and fear of failure will make the future bleak for us and for our posterity.

I hope this doesn’t sound too pessimistic. I believe things can “change.” But we must decide as individuals, communities, states, and a nation to restrain our passion for spending beyond our means. We must make decisions that take into account more than just ourselves; otherwise, the blessings of liberty that we still enjoy will be foreign to our posterity.

What do you think?

“Freedom is a fragile thing and is never more than one generation away from extinction. It is not ours by inheritance; it must be fought for and defended constantly by each generation, for it comes only once to a people. Those who have known freedom and then lost it have never known it again.” Ronald Reagan, 1967

Photo: Tim Bartel

The Standard-Examiner (Ogden, UT) published an op-ed I wrote about the federal “stimulus” money soon to come from Congress. I challenge Utahns to reject the money, and the regulations that come with it, in order to remain independent from the feds. Please read the article at the link below and make comments either here or on their site.

http://www.standard.net/live/editorial/nationalcommentary/163374/

What do you think?

Today is a time for choosing–not only what to have for dinner, but also, much more importantly, how much government influence we want in our lives. We are amidst difficult economic times. We have a new president who is promising “hope” and “change.” The decisions we make as a nation during the next few years could shape our relationship with government for decades to come.

Our first opportunity to choose has already presented itself. President Barack Obama is pressing Congress to approve an $825 billion economic recovery package. His plan includes tax cuts, and spending on things like infrastructure (roads, airports, etc.), renewable energy, education, and welfare. Thus far, nobody has identified from where the $825 billion will come.

Mr. Obama has said that with the money will come “strict, independent oversight that will allow the American people to hold Washington accountable for how and where their tax dollars are spent.” I applaud the president for his efforts to seek transparency and accountability. And yet, I fear that his statement is code for “regulation.” Federal dollars almost always come with regulatory strings attached, which, in this case, will dictate things like how our schools are run and what type of fuel our cars must use.

The recent bailout, this “stimulus” package, and more “help” sure to come, could turn into the greatest expansion of government influence in our lives since the “Great Society” in the 1960’s. Before we pursue this course, we would do well to remember that growing government is much easier than cutting it back once it’s in place.

During hard times, we’re tempted to ask government to step in to save us. Ironically, more government usually means less prosperity. Government may be able to “stimulate” the economy a bit in the short-run, but in the long-run we’ll be worse off.

This is a time for choosing. Will we cave in to our current fears and call for Big Brother? Or will we choose to stand for principles like limited government, self-reliance, and personal responsibility that have made and kept America free and prosperous?

In conclusion, President Obama is a good speaker, but there was another president who, in my opinion, was even better. Watch this speech given by Ronald Reagan in 1964 that launched his political career. It contains many words of wisdom that apply to our situation today.

What do you think?

Ronald Reagan, “A Time for Choosing,” Oct. 27, 1964

What do you think?

The elections for the next president of the United States are tomorrow…finally. After two years of campaign ads, news reports, yard signs, and debates, either Barack Obama or John McCain will take office in January. The new president will be at the helm of the largest, most productive economy in the world. At least, that’s what many Americans think.

Many Americans seem to vote simply based on the state of the U.S. economy. George H.W. Bush lost his bid for re-election in 1992 largely because the U.S. economy was faltering. Now, it appears that John McCain will lose for the same reason. This graph compares stock market performance with John McCain’s approval rating during the market’s greatest recent decline:

Source: The Washington Independent

I guess people assume that the economy’s recent troubles are “a final verdict on eight years of failed economic policies promoted by George Bush” and that McCain will continue the same policies. This may or may not be true, but I think it’s a huge mistake to vote for either candidate based solely on what’s happening to the U.S. economy today.

The president’s influence on the economy is minimal. Americans give the president way too much credit. The president proposes the annual budget but only Congress can approve it. The president can propose policies that affect the economy, but only Congress can enact them. Even when the president vetoes a bill, Congress can override his veto.

The president’s greatest influence on the economy comes through the regulatory power of government agencies in the executive branch, but the president must operate within the parameters that Congress outlines for those agencies. If any one person or government body can affect the economy, it’s Congress. The private sector — businesses and consumers — impact the economy on a much greater scale. Government is only one small actor among the trillions that affect the economy.

Certainly, a president does influence economic performance, especially when he has lots of power. Just look to Nazi Germany, the Soviet Union, and, today, North Korea. But in our system of checks and balances his influence is minor. And if anything, he can do more to harm it than help it.

The problem is that the more government gets involved in the economy, the more influence the president does have on it and the more Americans will blame him for their economic woes and expect him to fix them, even though he helped create them.

In 1850, a wise Frenchman wrote of his country:

the responsibility of government is enormous. Good fortune and bad fortune, wealth and destitution, equality and inequality, virtue and vice — all then depend upon political administration. It is burdened with everything, it undertakes everything, it does everything; therefore it is responsible for everything.

If we are fortunate, then government has a claim to our gratitude; but if we are unfortunate, then government must bear the blame.

(Frederic Bastiat, The Law)

For now, we cannot attribute the success or failure of our economy solely to the president. He has a part in it, but so do Congress, businesses, consumers, and anybody who makes any economic transaction within or with the United States. We should definitely examine each candidate’s economic proposals and vote based on what impact we think they’ll have on the economy, but we should remember that the president’s ideas and actions are only one small part of our massive economic system.

What do you think?

Here is a very interesting article on the relationship between political parties and the economy.

The stock market is down 39.4% from a year ago today and is at its lowest point since May 2003. Call me insane or delusional if you’d like, but I think this financial crisis is good for America. First, I’ll explain what effect the crisis is having on our economy and then why it’s good.

Effects of the crisis
Many of our largest investment and commercial banks have failed because of “toxic” mortgages, which means that credit is tightening. Since banks are losing money on their investments, they have less money to lend to individuals and businesses. People are having a harder time getting loans for cars, houses, and education. Small and large business owners are having a harder time getting loans to buy land, buildings, equipment, and other things needed to run and grow their businesses. This means lower profits for businesses and therefore fewer jobs and higher prices for their products. This will probably continue to happen despite the government bailout. I think this is good for the U.S. economy.

Why this is good
Free markets are like the human body. When there’s something toxic like a virus in your stomach, you naturally react by vomiting to get it out. Right now, the financial markets have a bad virus in them–unpaid mortgages and risky lending practices. The markets are trying to get the toxins out by vomiting, but government is trying to keep them down.

One of the most important aspects of a free market economy is that it allows failure and awards good decisions. Businesses that fail–whether they produce bad products, charge prices higher than people want to pay, are not efficient enough to make a profit, engage in dishonest practices, or anything else–do so because consumers and investors decide not to support them. Markets weed out bad companies (kind of like a challenging Calculus class weeds out some students aspiring to be math majors), whereas better companies survive and grow stronger. This process of refinement strengthens the economy by forcing companies to be as efficient and beneficial to society as possible or else face extinction. All this happens with little or no government intervention.

In the current financial crisis, some financial institutions have extended credit to people who could not afford it or have invested heavily in faulty assets. Also, many consumers have borrowed too much. Now, they’re all paying a big price for their decisions. The worst thing government can do is prop up these failing companies and unwise consumers through bailouts. If we don’t allow them to fail, then they’ll continue to make bad decisions and hurt the economy even more. On the other hand, if we let them fail, then better companies will buy the good that’s left of the bad companies, and they’ll learn to be more efficient during hard economic times and eventually become stronger. Consumers will also learn to live more within their means.

Government should just relax
Without government intervention, the economy would take a huge hit (perhaps even worse than it is now), but in the end our financial institutions would be stronger. They’d learn that sub-prime lending and other risky practices will cause them to fail, and the best companies would learn not to repeat those mistakes. And hopefully, as Americans suffer through a recession, they’d realize that excessive debt hurts them and the economy. Maybe they’d start to save more and spend less.

Bailing people out only tempers the sense of urgency for the need to change. And the ironic twist here is that government helped cause this economic mess and now wants to save us from it. Government would do better to let the economy vomit out the toxins that are making it sick rather than trying to help it hold them in. The quicker the markets get the virus out on their own, and suffer the pain that goes along with that, the sooner the economy can be healthy again, and probably even stronger than ever.

What do you think?

The stock market has taken a hit lately. Homeowners are defaulting on their loans, credit is tightening, and banks are failing. Some people are calling this the worst financial disaster since the Great Depression. Part of the problem began with people taking out risky subprime loans. Large banks on Wall Street invested in these loans and are regretting it. Now it’s time for Wall Street to take out a subprime loan from the federal government.

Here’s what’s happened in layman’s terms:

In the 1990’s, people began buying homes they could not afford. Lenders invented evermore creative ways to help people–even those with bad credit–take out loans. Large investment banks on Wall Street began investing in these high-risk loans because they thought they could make huge profits on their high interest rates. The risk turned out to be too much even for them.

As people began to delay mortgage payments and default on their loans, the financial markets as a whole began to suffer. Investors in all areas of the market started to lose confidence in their investments. Those big banks are now stuck with lots of mortgage-related investments that they can’t sell. They’re paying a mighty price for taking huge risks.

Recently, enormous investment banks like Bear Stearns, Lehman Brothers, and Merrill Lynch have failed. The federal government has effectively taken control of AIG, Fannie Mae, and Freddie Mac, assuming their loan obligations worth trillions of dollars.

Now, President Bush is proposing the largest government bailout since the Great Depression. He wants to allow the U.S. Treasury to buy as much as $700 billion ($2,333 for every American) in mortgage loans to prevent these big banks from failing. Bush has said that without government help “Americans could slip into a financial panic and a distressing scenario would unfold.” In other words, there could be a meltdown of the entire U.S. and, therefore, global economic system.

I’m skeptical of this government bailout. Irresponsible homeowners and greedy investors caused this problem. Why should prudent, hard-working, responsible Americans pay for the sins of the irresponsible, foolish, and greedy? It is possible that inaction by the government could lead to a depression. But I don’t think anybody really knows whether or not a bailout is necessary or is going to work.

And what does a generous bailout teach those who were misguided or foolish? “Everything’s alright, do whatever you’d like and we’ve got your back.” In the end, if we decide to save them, then I say give the greedy bankers what they need–a subprime loan.

Lend them $700 billion with a 23.6667% interest rate. Their credit, after all, is not worthy of a lower rate. Make them pay it back–all of it. Teach them to be responsible for the obligations and risk they assume. And whatever we do, let’s not burden our generation and many to come with trillions in debt. Let’s act responsibly as a government and expect all of our fellow citizens to do the same.

What do you think?

Growing up in Utah was good. I enjoyed the small-town (but not too small) atmosphere in Provo. I also enjoyed taking trips to the big city–Salt Lake City. I’ve always been fond of big cities filled with skyscrapers, bridges, interesting people, and cultural activities.

Now that I’ve been to big cities like Los Angeles, San Francisco, Seattle, Phoenix, Denver, St. Louis, Chicago, Washington, D.C., Baltimore, Philadelphia, New York City, Boston…ok, I think you get the idea…I realize that Salt Lake City, and especially Provo, are rather small. However, rapid growth and ongoing projects of massive proportions seem to indicate that the Wasatch Front, particularly the Salt Lake and Utah valleys, may become the next Los Angeles.

While living in L.A. recently, I could drive on its packed, deteriorating freeways from downtown Los Angeles to the next downtown in Westwood, then another in Torrance, then Long Beach, Santa Ana, and on and on, all within the same metro area. Today, Los Angeles County, with a population of 10 million, is a sea of never-ending homes, businesses, parks, roads, and other infrastructure. The borders between cities are blurred so that you hardly know when you’re in a different place. L.A. County is even physically connected to Orange County.

Downtown Los Angeles is very small for a city of 4 million people, I think because things there used to be all spread out, just like the Wasatch Front still is in some places. But over time all of the Los Angeles suburbs have become interconnected and space is lacking. Rather than everyone congregating in downtown L.A., each big city surrounding L.A. has its own downtown each with a unique role and setting. Many other large urban areas follow this same pattern.

The Utah Governor’s Office of Planning & Budget (GOPB) projects that by 2050 Utah’s current population of 2.6 million will be almost 6 million; Salt Lake County will have 1.8 million people and Utah County 1.2 million.

On the Wasatch Front, borders between cities are becoming blurred, traffic is increasing, and other downtowns are rising from the dust. For example, Sandy is about to begin building three towers that are 30-40 stories tall (up to 550 ft). And in Lehi, a developer is planning a 450 ft tall hotel along with a lake, sports arena, shopping, and residencies. Downtown Salt Lake may soon not be the only big city downtown, though it will gain more attention when the City Creek Project is completed around 2012.

It appears that someday in the future, and not too distant, the Wasatch Front will be one great interconnected megalopolis, just like Los Angeles. It may not have Hollywood, but it will have the challenges and benefits that come with growth. Utahns will have more to do and see but also more challenges with transportation, water, energy, crime, and so on. Overall, I’m excited for this growth. I picture Utah in 40 years as a vibrant state that will gain increasing national and international attention. I just hope that as it grows Utahns face the challenges that come with that growth with urgency, wisdom, and care.

What do you think?

The opening of the 2008 Summer Olympics in China and the recent death of Soviet dissident Aleksandr Solzhenitsyn give us an opportunity to reflect on Communism…and Mormonism.

Have you ever heard someone in church say, “Communism is a good theory that just hasn’t worked out well yet,” or “Communism and the law of consecration are basically the same thing”? I’ve heard both statements and disagree with both.

Let’s define them
In the ideal communistic society, the central government owns all land, credit, means of communication and transportation, property, and the means of producing goods and services. There are no classes, no families, no free speech, and no religion. In short, under Communism individuals are forced to live with nothing, and government is their God.

In contrast, according to Ezra Taft Benson, “the law of consecration is a celestial law, not an economic experiment.” Individuals choose to give their property to the Church and decide how much they need back to support their family’s “wants and needs.” There is no coercion, and, most importantly, God is the cornerstone of the entire system.

Quotes
Here are some quotes from the Brethren.

Marion G. Romney (1979):
“Communism is the greatest anti-Christ power in the world today and therefore the greatest menace not only to our peace but to our preservation as a free people. By the extent to which we tolerate it, accommodate ourselves to it, permit ourselves to be encircled by its tentacles and drawn to it, to that extent we forfeit the protection of the God of this land.”

Ezra Taft Benson (1977):
“Communism introduced into the world a substitute for true religion. It is a counterfeit of the gospel plan…”

“Another notable counterfeit system to the Lord’s plan is collectivized socialism. Socialism derives its philosophy from the founders of communism, Marx and Engels. Communism in practice is socialism…Both communism and socialism have the same effect upon the individual–a loss of personal liberty.”

First Presidency (1936):
“We call upon all Church members completely to eschew Communism. The safety of our divinely inspired Constitutional government and the welfare of our Church imperatively demand that Communism shall have no place in America.”

Are Mormons communists?
Yes, Mormons are communists–only in the sense that we believe that our community around us is important. We should care for and help our neighbors in need, but we should choose to do it on our own. Communism may sound enticing to some people, but I doubt it does to the approximately 94 million who died under it and those who have survived it.

***Please read this stirring account of Ezra Taft Benson’s visit to the Soviet Union while he was the U.S. secretary of agriculture.***

What do you think?