Religion, Politics, and Same-Sex Marriage

Minnesota currently faces a proposed change to its Constitution that would prohibit the legalization or recognition of marriage for same-sex couples. The foundation for the support for this amendment comes from various religious groups in spite of the fact that many who oppose the amendment are also people of faith. The disconnect between these two groups and the use of the Constitution as the battle ground illustrates why religion has no place in politics.

In the United States, the foundation of our political lives are our federal and state Constitutions. No federal or state law may violate the United States Constitution, and no state law may violate the state Constitution of that state. The proposed amendment would add the following:

Only a union of one man and one woman shall be valid or recognized as a marriage in Minnesota.

Like all language, the language of the Constitution is subject to interpretation and may be interpreted differently by different individuals. The above language may seem crystal clear, but it leaves open a number of questions, including:

• Can the state eliminate marriage in MN and create a new kind of union available to all?
• What is it to “recognize” a marriage?
• Is it illegal for my business to recognize the marriage of a same-sex couple married in a state where it’s legal?

I’m not trying to launch an argument about the meaning of this amendment, but instead to illustrate how any such arguments might be resolved. One of the beauties of the United States system is that we have an entity to serve as the arbiter of what the language in our Constitutions and laws means. It’s the judicial branch with the Supreme Courts serving as the ultimate authority. When we disagree about what the Constitution means on any subject, we bring it to the courts and they tell us. Once it gets to the Supreme Court, that decision is final unless we amend the Constitution to change the meaning.

Religion, on the other hand, has no such unquestioned universal authority. When people disagree about the Bible as they do with the issue of same-sex marriage, who is the interpreter?

The idea that the Bible is the “word of God” is often the foundation of this problem. The reality is that the Bible was written in human language by human beings and translated many times over many centuries by many humans. Many of these humans held very human, very political agendas when perform their translations. Compare any two Bibles, and their words in English are often materially different. Humans are imperfect. Human language is imperfect. Any attempt by humans to communicate the word of God will be inherently imperfect. In fact, any attempt by humans to understand the word of God will be inherently imperfect.

So who interprets the Bible for society? The United States Constitution was born of a world waging constant wars in Europe over different interpretations of the Bible. There can be no interpreter of the Bible or any other religious document for society, only for members of that religion. The Pope is the final authority of the Bible for Catholics. Non-Catholics would be very, very wary of accepting Papal authority of interpreting the Bible. Similarly, most people of Western faiths would be wary of a secular state interpreting the Bible as the Communist Party does in China.

The Bible can have no single authority to which we can appeal for interpretation and, as a result, cannot form the basis of our Constitution and our laws. It has no place in our politics.

Analysis of the Economic Crisis

This economic crisis is every bit as serious as its being billed. The bottom line: if nothing gets done about this situation, no one will lend money. Period.

I know there is a minority of anti-fiat money people who think that is a good thing; but the reality is that it is a horrible thing.

You know in the good ole days the ads that said, "Bad credit? NO PROBLEM! You're approved." Today, those will read, "Good credit? DOESN'T MATTER! WE WON'T LOAN YOU A DIME!"

Why?

To put it simply, our lending institutions don't have the capacity to lend any more money. All of these "trash debts" on their balance sheet have diminished their reserves and put them at great risk. They just can't lend any more money unless the following things happen:

1. They increase their cash reserves
2. They decrease their risk profile

So what happens? Perhaps the most critical things are that:

• Big businesses don't have the cash to operate properly
• Small businesses can't get loans to make payroll or expand
• Individuals cannot buy houses or cars

Net result: an economic downward spiral

Individuals stop buying houses because they cannot get loans. Housing values decrease. Loan defaults increase as more and more people are upside down on their mortgages.

Small businesses simply go out of business because they cannot make payroll. New businesses cannot start (as an aside, one of the saving graces of a traditional recession is that people losing jobs start businesses that inject economic growth into the economy; that won't happen here because people losing their jobs won't find capital).

Big businesses that normally can borrow their way through economic downturns suddenly find they have no place to find capital. They cut jobs dramatically or go out of business.

HUGE job losses.

In short, we are honestly talking economic catastrophe. And I don't see where we recover. Eventually, I believe in America and believe we would recover. But this is Depression-style badness.

The Proposed Solution?

Any solution must create a health financial system capable of providing capital for economic growth. In other words, that has to be the end objective to deal with the short-term crisis.

Obviously, a long-term solution needs to include checks against lending the protect against over-exuberant lending to high risk customers as well so we don't end up in the same bucket the next time we have a real-estate bubble.

The proposed solution involves having the government buy off these "trash debts" at a fairly absurd price. For whatever reason, Paulson has proposed buying these things out at above the institution's carrying price (the carrying price is what the bank values the debt at on its balance sheet). The market price is well below that rate. For some reason, Paulson claims the market price undervalues these debts. I think that's bullshit. The market price is the right price.

At any rate, the government buys these debt instruments and then collects the payments. In an ideal world, everyone ends up paying back their loans and the government makes a profit. If the rate of return on the profits exceeds the interest the government is paying to borrow all these money, the US government ends up making a net profit.

In the mean time, the financial institutions are relieved of the burden of these risky debts AND they have money to loan into the economy.

Good news?

Well, three problems:

1. As mentioned above, Paulson is currently seriously overvaluing the debt. As a result, the government will overpay for these bad debts. That means more interest the government is paying on the money it is borrowing, and the harder it will be for the taxpayer not to get saddled with higher taxes to pay off this loss.
2. That's a lot of money being injected into the economy outside normal channels. I honestly fear two things:
   1. Inflation will kick in
   2. The Fed will have to hike interest rates a lot, thus making capital hard to get!
3. The proposal as I understand it now lacks important checks and balances. As a result, there is a lot of opportunity for corruption. If you are a Republican and don't care that Paulson has absolute authority over $700B, keep in mind it could be a Democratic appointee in the near future with that control. Either scenario is untenable. Beyond the risk for corruption is simply the risk of incompetence. Even with the best intentions, $700B in the hands of incompetents without any oversight is a bad thing. And finally, without tying any strings to this buyout, we risk these financial institutions turning around and making the same stupid mistakes.

Who is to blame?

Everyone is to blame. Not simply Republicans and Democrats. Managers and home owners, farmers and financial gurus.

It does start with the relaxation regulations governing financial institutions that began in the 1980s. These regulations were put in place in the 1930s in response to the excesses that caused the Great Depression.

Remember, in the 1920's we had a rapidly expanding economy with little regulatory oversight over financial markets. The result of the two things combined helped cause the Great Depression (among many, many, many other causes).

Fast forward to the 1980's. We relax many of the regulations meant to prevent another Depression. That relaxation continues through the end of the 1990's. In the mean time, we have an amazing period of economic growth.

So, what happens? Lots of capital is sitting in our financial markets as a result of rapid economic growth. Low inflation means that the cost of lending is low. And the lack of oversight combined with phenomenal growth in real-estate values makes financial institutions more and more willing to accept inappropriate loans (the real-estate values are key; they create the illusion that the loans are less risky than they really are).

So, now combine lack of regulatory framework with bad business decisions.

And add to that bad personal finance decisions. People are accepting way too much debt because they believe their home values will double in 5 years or something stupid.

So, we have:

• Lack of regulatory framework
• Rapid economic growth
• Rising real-estate values
• Low inflation
• Bad business decisions by financial institutions
• Bad personal finance decision by individuals

Remove 1 from the mix, and things are likely not so bad. Mix up the cocktail, and BOOM!