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”.