Are We Ready for Freedom?

David C. Stolinsky, MD
April 26, 2010

[W]e have no government armed with power capable of contending with human passions unbridled by morality and religion…Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
− John Adams, 1798

The founders knew that in order to remain free, people had to control themselves, based on moral principles derived from religion. Otherwise, an authoritarian government would have to control them. Current “progressive” politicians want to institute an authoritarian government, so to them, people who control themselves are uninteresting at best, and actually undesirable at worst.

Are regulations necessary? Of course. For example, those who run our financial institutions cannot be allowed to do anything they please. But who will write these regulations? Who will enforce them?

● The gurus at the Federal Reserve, who oversaw the banking system but overlooked its severe overexposure to financial derivatives − that is, potentially worthless paper?

● The officials of financial institutions who fabricated these derivatives by bundling bad loans with good ones, then fobbed them off on customers as sound investments?

● The rating agencies that should have known better, but which rated these derivatives as sound investments.

● The officials at the Federal Deposit Insurance Corporation, which insures banks against failure, but charges the same fee whether the bank is sound or shaky? Would an auto-insurance company remain in business if it charged the same premiums to those with drunk-driving convictions as it did to careful drivers?

● The people in charge of Fannie Mae and Freddie Mac, those quasi-governmental agencies that oversaw mortgage lending but overlooked − in fact, actively encouraged − issuing home loans to those who were unlikely to be able to repay them?

● The members of Congress like Barney Frank, who exerted strong pressure on the Fed and on financial institutions to give home loans to those unlikely to repay them?

● The officials at the Securities and Exchange Commission, who spent so much time on Internet pornography that they saw nothing wrong with the obscene goings-on in the securities markets they were duty-bound to oversee?

Yes, regulations are needed. But the government officials who will write and enforce them were a major part of the problem. What makes us think that now they will be part of the solution?

And while I’m asking difficult questions, here is one. When we bought our home years ago, we got the loan from Great Western Savings, a reliable California firm. Then it was bought out by Washington Mutual, a nationwide firm that went on to produce the biggest bank failure in American history. Reportedly, it paid employees according to how many loans they wrote, not how sound the loans were.

Such shenanigans were made possible by securitizing the home loans. The bad ones were bundled with the good, then dumped onto the market, where unwary investors took them off WaMu’s hands.

So my question is this: Exactly what happened to turn Great Western, a solid firm with a solid name, into WaMu, with a name that sounded like a circus clown − and with the brainless actions to go with it?

And here is another question. Bank of America was founded in 1904 by A. P. Giannini, the son of Italian immigrants. He opened a bank for “little people.” It stayed open past the usual “bankers’ hours.” It opened neighborhood branches. Giannini felt the hands of loan applicants. If they were calloused, he knew the person was a hard worker and approved the loan.

Though it was limited by law to California, it became one of the largest banks in the world. Then it was allowed to spread nationwide and merged with NationsBank, which was deeply involved with trading in derivatives. And in 2009, Bank of America required a bailout from the federal government to avoid insolvency.

So my question is this: Exactly what happened to the “little people’s” bank founded by A. P. Giannini, and caused it to expand into a huge, bloated contraption on the verge of failure? Here is a clue − Giannini’s first name was Amadeo, which means “love of God.”

Whatever economic system we adopt − whether it is capitalism, socialism, or a jerry-built corporative system akin to fascism that President Obama seems to favor − we must depend on people to run it. Almost any system would work tolerably well if it were run by hardworking people of integrity.

But no system − even if it is designed by the most brilliant academics and the most flatulent theoreticians − can work at all if it is run by untrustworthy, self-seeking narcissists, whose only goal is to grab as much as they can and get out before the whole shaky structure collapses.

Our form of government, and our free-enterprise system, serve as models for much of the world. Now many nations may hesitate to follow our example. (How do you say Lehman Brothers in Spanish, Fannie Mae in Swahili, WaMu in Russian, Bernie Madoff in Chinese, or bailout in Arabic?)  In that case, we will be partly responsible when millions of people remain in poverty and oppression. If we can’t make political and economic freedom work, why would they think that they can?

We are trying to maintain our republic without being the moral and religious people that Adams knew were required. We are trying to maintain our financial system without the trustworthiness that a handshake used to imply. We are trying to govern ourselves without controlling ourselves. We are trying to do the impossible.

When President Bush listed establishing a democratic government as one of the reasons for invading Iraq, critics asked whether Iraq was ready for freedom. This was a valid question, and though things look promising, as yet the answer remains unclear. But here is an even more important question, to which the answer also remains unclear: Are we still ready for freedom?

Are we still trustworthy individuals, ready to take responsibility for ourselves and those who depend on us? Are we still willing to control ourselves according to ethical principles derived from religion? Are we still capable of maintaining an ordered society, with only occasional intervention by a government bound by a written Constitution?

Or are we incapable of managing our own affairs, much less those of others who depend on us? Are we emotional and intellectual teenagers, who boast of being grown up, but who depend on mom to take care of us when we are sick, and on dad to make the rules and give us an allowance?

After all, what else is ObamaCare, with its intrusion into the doctor-patient relationship? What else are all the other governmental intrusions into daily life, even including regulation of light bulbs and toilets? Though they are called “progressive,” they are in fact a regression to an earlier time, when King George III and his officers told us how to live our lives − and enforced their will with muskets and bayonets. Why does the Department of Education need short-barreled shotguns? What method of education employs lethal force? In the end, more government means more muskets and bayonets.

After all, how bad can the Stamp Act and the Tea Tax be? King George means well, doesn’t he? He’s a family man, isn’t he? He’s interested in farming and the environment, isn’t he? He’s our legal sovereign, isn’t he? He’ll take care of us, won’t he?

Are we still ready for freedom? This November’s elections will give a large part of the answer. In order to be free − in Iraq or in America − people first have to want to be free.

Dr. Stolinsky writes on political and social issues. Contact: dstol@prodigy.net.

www.stolinsky.com