Be wary of Moral Hazards

Rarely do I get a chance to “scratch my itch” and talk much on economic or political issues. However, I’ve been itching to post a few comments on the present economic situation so here is me scratching my itch…

When the $700 billion (does anyone really know how much money that is?) bailout of the credit markets was proposed in early October, I was a hesitant proponent. (How is that for a firm “maybe”?) I was hesitant because I am by nature very skeptical of the benefits of government intervention but I was OK with the idea as it was initially proposed. The initial proposal was explained by Treasury Secretary Henry Paulson as the purchase by the government of poor quality and foreclosed secondary market debt in order to free up capital for lending and the normal health of the economy.

That situation has changed as the government, politicians, business and labor leaders, and special interest groups are lobbying hard for all kinds of bailouts from large insurance companies, banks and the Big-Three (including my Alma Mater: Ford) to direct subsidies for student loans, car loans and rental property.

I have a simple answer to these types of bailout requests. The answer is “no”.

My response has nothing to do with whether some of these corporate leaders were greedy (of course they were) or whether some people may end up unemployed (also unfortunate but likely) or whether the government has the money to help (it does not). My reasoning is actually much simpler than that and it’s based on the economic concept called “moral hazard”.

In economic terms, “moral hazard” refers to the long-term consequences of bailouts. Bailouts change how organizations handle risk, particularly the risk of failure. In simple language, when governments bail out people or organizations, it makes them and other people and organizations actually change their behavior not for the better but for the worse as bailouts actually encourage them to manage and make decisions that are more risky and more likely to require another bailout in the future.

Intuitively, we know that when we continue to make excuses or come to our children’s rescue, it encourage more of the same unfortunate behavior. Many of us have known for years that one of the downsides of pumping more money into programs that provide safety nets to people also encourages more people to behave in ways that make them more likely to require safety nets.

If we are fortunate, this economic downturn will not be severe enough to punish organizations that have been diligent enough to be re-engineering, reinventing and re-marketing themselves and are truly competitive in the world market. If the economic downturn is very severe and/or companies have been fat and happy and have not been diligent to remain competitive, the bailout won’t help them anyway.

Ambitious Lives

As parents, my wife and I have always been pleased when we see that our children (now adults) have ambition. Ambition was much more likely to get them out of bed in the morning than an alarm clock. Ambition also got them into college and through college so that they have the opportunity to work and have a career. Ambition introduced them to their spouses and now that we have grandchildren, ambition will encourage them to pay attention to the God-given role of being mothers and fathers so that their children grow up with these same opportunities as well.

However, too much ambition, or more correctly too much ambition for the wrong things, is a negative influence in our lives and will lead us down the wrong path. Expensive cars, the love of money, sexual conquests and power will become a corrupting influence in our lives and certainly will not please God.

The Apostle Paul had something to say about ambition. In 1st Thessalonians, 4:11 Paul says, “Make it your ambition to lead a quiet life, to mind your own business and to work with your hands.” Paul is telling us to be “ordinary”, or be hard working and a good citizen. In telling us to be ordinary, Paul isn’t telling us not to strive but rather to live in a way that we earn the respect of those around us and to avoid those lifestyles that would cause people to think that we have more selfish ambitions than to be good neighbor.

It is exactly for the cause of Christ that Paul encourages us to be ambitious for the ordinary. This 4th chapter of Thessalonians is often titled, “Living for God” in many Bibles and Paul’s instructions here are about the continuance of brotherly love and a reminder that we have been taught to “love each other”. Paul tells us that our ambition for the ordinary is "so that your daily life may win the respect of outsiders and so that you will not be dependent on anybody." (verse 12)

I love that….be ordinary, mind your own business and be hard working; so that in every way, we have the opportunity to win the right to lead others to the Savior.

So get out there and be ordinary!

Holy Money

All too often, the best counsel and advice, the best instruction on integrity, accountability and transparency in our churches and nonprofit ministries is largely ignored by the very leaders, organizations and churches that most need to embrace it. Huge salaries, expensive cars, and lavish fringe benefits, when discovered, are widely reported by the press and the church suffers as a result. While there are no specific standards set by the government, the IRS, or even the Bible regarding how much salary is too much, at what price does a vehicle become inappropriate for a minister, or whether ministry leaders should fly coach, first class or on their own private jets, most of us intuitively know when enough is enough.

While there may not be any written instruction in the Bible about pastor salaries, cars or benefits, the Bible does speak about holiness. I remember learning years ago that holiness is about being separate. Not separate from the world, but separated from sin. I've also learned holiness isn't so much about being free from the distractions of the world as being uncorrupted by the things of the world.

When my daughter and son were younger they would challenge me from time to time about the rules their mother and I had placed on them that were meant to keep them from unholy influences. I told them often that although Jesus had the opportunity to eat, visit and fellowship with both saints and sinners, He always had more influence on the people around Him than they had on Him.

Unfortunately, in the midst of teaching on prosperity, the tithe and the hundredfold return, many have forgotten the basic understanding of holiness. One of the great expositors of the 19th century, J.C. Ryle, described holiness as "the habit of being of one mind with God ... hating what He hates, loving what He loves, and measuring everything in this world by the standard of His Word." In Holiness: Its Nature, Hindrances, Difficulties, and Roots, Ryle wrote that "a holy man will endeavor to shun every known sin and to keep every known commandment. ... [He] will follow after temperance and self-denial. He will labor to mortify the desires of his body, to crucify his flesh with his affections and lusts, to curb his passions [and] to restrain his carnal inclinations."

Though the topic of holiness involves an array of issues, let's hone in on those particular to running a ministry—more specifically, a ministry that has the opportunity to receive large amounts of money from donations given freely and provided a tax receipt.

As our churches and ministries grow, we need to allow those with the gift of administration the opportunity to exercise their gift to the extent that God has enabled them (see 1 Cor. 12:28). Pastors usually have numerous gifts, including those of leadership, preaching and teaching, to name a few. Yet pastors really should not be involved in setting their salaries, determining what types of cars the ministry should provide them and various other perks, let alone what the IRS requires regarding documentation on expenses and receipts.

Senior pastors and other ministry leaders who insist on rejecting the counsel of properly trained accountants and CPAs typically believe they do not need to be accountable to anyone. Yet those who continue to handle financial accountability and transparency via a "seat of the pants" approach are looking for trouble. Being too close to large sums of money is too much of a temptation for most men or women. Those who are wise will seek the counsel of others and find ways to separate themselves from that which would cause them to stumble.

Although we are all disturbed that Christian ministries and churches are currently the subject of government inquiry and public ridicule, I'm prayerful that we can see that "all things work together for good" (Rom. 8:28) through these inquiries. I certainly hope that in the end, many nonprofit and church boards will be strengthened, financial accountability will be improved and transparency enhanced.

In the meantime, a little discernment goes a long way. If it seems like “too much”, it likely is.

(excerpts taken from Holy Money also written by the author and published by "Ministry Today" in February 2008)

Change Happens

A change in leadership, any leadership, can result in celebration and also be a reason for consternation depending on your perspective. With the recent election of Barack Obama, we all have reason to celebrate. Barack Obama is the first African-American to be elected to the highest office in the land.

We can celebrate that regardless of whether you believe race was an issue in the election, he was elected and as a nation, we have crossed a significant milestone in this country’s history. Not unlike Ernie Davis winning the Heisman Trophy or Martin Luther King as Time Magazine’s “Man of the year” or Thurgood Marshall as a Supreme Court Justice, Barack Obama is another “first” and represents widespread cultural change for all minorities in the United States.

Another cause for celebration -- with 52% of the popular vote, Barack Obama captured the largest percentage of the American public’s vote since George HW Bush (53%) in 1988 and Ronald Reagan (59%) in 1984. Having a majority of the American public behind a new President can be both a humbling as well as empowering event and should result in fewer partisan attacks, hopefully on both sides. Wouldn’t it be nice if we could all just get along?

In many ways, this was an historic victory for the Democrats; and we all can celebrate the fact that in America, we have a peaceful democratic process that results in elections with real winners and losers. All of which are accomplished without the loss of blood, the forming of mobs or shots of “tyranny” in the streets.

Finally, as Christians we believe in a sovereign God who is the ultimate determining factor in who will be allowed to govern a nation. As the Creator of all things, God rules supreme in the affairs of state. Regardless of the ruler, whether Prime Minister, King, President or Dictator, Daniel 2:21 says it is God that, “changes times and seasons, He removes kings and sets up kings; He gives wisdom to the wise and knowledge to those who have understanding.”

Change is certainly happening. Let’s pray and believe that ultimately we will all celebrate and enjoy the blessings of God on this nation, our cities and our families.

Still a little concerned? Well, remember to continue to look the Lord. Proverbs 21:1 says, “The king's heart is a stream of water in the hand of the Lord; he turns it wherever he will”.

Discipleship Challenged

Today, if we look around, we see churches that have great buildings, cool kid programs, are technically savvy, and culturally relevant. However, if the truth be told, many are also "Discipleship Challenged".

All too often, we just aren't doing discipleship AT ALL. That's a tragedy but likely also the reason that many of our Evangelical churches are failing. We fail not so much by declining attendance but by becoming more and more like the rest of the world.

As Evangelicals, we should be defined by two commands, typically known as the Great Commandment and the Great Commission.

The great commandment is actually two where ( in Mark 28) Jesus said, "Hear, O Israel, the Lord our God, the Lord is one. Love the Lord your God with all your heart and with all your soul and with all your mind and with all your strength. The second is this: 'Love your neighbor as yourself.'There is no commandment greater than these."

However it is the Great Commission that is largely ignored by the church. After Jesus rose from the dead he spent another fifty days teaching and preparing His disciples. Just before he ascended into heaven, Jesus gave them and us a command: "All authority in heaven and on earth has been given to me. Therefore go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, and teaching them to obey everything I have commanded you. And surely I am with you always, to the very end of the age."

Becoming a disciple is not the same as becoming a member of a church like it was some kind of club. The word disciple means "to follow" and "to learn". It also has the connotation of adhering to a person and imitating a person. That person is none other than Jesus.

The early church grew because believers invested in other people and made disciples. Many churches today invest in buildings and hope that some educational program will make disciples. Discipleship however has always been relational and involved reaching and mentoring and teaching. Just like Jesus!

More Faith, More Compassion

A recent Gallup survey conducted worldwide found that there was a direct correlation between a faith and giving. People that identified themselves as being “highly religious” (I personally don’t like that term) are much more likely to have an active faith in each of three behaviors that Gallup surveyed: giving, volunteering and personal involvement.

For example, in the Americas, people who report that religion is important to their daily lives and who also report having attended a religious service in the past week are 39% more likely to recently have donated money to a charity, 61% more likely to have volunteered their time to an organization in the past month and 14% more likely to have helped a stranger or someone that they didn’t know in the past month.

It’s refreshing to know that “faith”, however defined, is active and not passive. For those that are Christians, the message of the cross is one of unconditional love and compassion. While Christ serves as our ultimate example of unconditional love and compassion, we are clearly told “go and do likewise” The example of the sheep and the goats that Jesus told (Matthew 25) of the end times and eternal judgment is clear about how our faith needs to be active: For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.'

Faith, compassion, generosity, self-less love are all the visible reminders of a faith-filled life.

Reconstruction Coming

Too many of our politicians and news personalities will mention the present economic crisis and then in the same sentence make a reference to the Great Depression from 1929-1941. I really don't think we are headed to another great depression but hopefully, there is a reconstruction coming. We'll be fortunate if the depth of the economic downturn is not as severe nor the time period as extended.

The Great Depression comparison is not that surprising as much of the political and economic sentiment in 1929 and 1930 is similar to what we hear from our not-so-great statesmen of today.

Take for example the Stock Market crash of 1929. The years preceding the crash were a time of great prosperity. The stock market was going through the roof and while there was a charge that the "rich were getting richer", most historians agree that all economic classes were prospering.

However, too much debt, too much leverage and the banks ultimately failed. A situation not unlike today in many ways. For example, the percentage of households buying cars on instalment more than tripled between 1919 and 1929, rising from 4.9% to 15.2%. Home mortgages were also on the rise as easy-credit seemed to improve the standard of living for most Americans.

The Republicans were blamed and the Dems won. While Franklin Roosevelt was an impressive political figure and was head-of-state during World War II, few of the campaign promises of the Roosevelt platform of 1932 were honored. The massive national debt of the previous administration under Herbert Hoover reached a high of 40% of GDP, but Roosevelt's debt ratio went well over 100% of GDP by the time the war had started in 1941 and of course higher afterwards. Expansive new government programs of the New Deal expanded the federal government. Unemployment, the cruel output of a depression, which today stands at about 6.1 %, was never lower than 17% during the Roosevelt administration and was at 25% when the Japanese attacked Pearl Harbor.

Hopefully, a reconstruction is coming. A reconstruction of our economy based on principles rather than simply opportunity; and a spiritual reconstruction of our lives based on Biblical principles rather than popular and contemporary fads and myths. We can all pray that the times and season of the transition will be relatively short and not as severe as the Great Depression.