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The three laws of nature

By Henry Lamb
web posted February 2, 2009

Pundits and politicians are regurgitating phrases such as: "the worst since the great depression…; highest unemployment rate since…; largest deficit since…."  Few acknowledge that government is the most significant cause of the current dilemma, or that its determined efforts to solve the problem can only make the problem worse.

The underlying cause of the current crisis is government's efforts to repeal the laws of nature.

The first law of nature is: everything changes.  The second law of nature is: change forces adaptation or extinction.  The third law of nature is: whenever government sets out to repeal these laws, it only makes things worse.

These three laws of nature are validated by history.  All the progress made by society since the beginning of time is the result of individual effort and creativity.  Government has produced nothing.  Government can produce nothing.  Government can only limit, restrict, redirect, and generally impede the progress of individuals.

The current mess, for example, is largely the result of government trying to force society to do something that society should be deciding to do – or not do – on its own.  Specifically, in the late 1960s and early 1970s, a significant number of people believed that all people had a "right" to housing.  These people were successful in electing a president and a sufficient number of congressmen to enact the Community Reinvestment Act in an effort to provide housing to all. 

Consequently, the government forced banks to make loans to people who would not otherwise qualify.  To make sure that the banks would extend credit to unqualified borrowers, the government agreed to buy the risky loans from private lenders through special, government-funded agencies, Fannie Mae and Freddie Mac, which were created expressly for the purpose of guaranteeing risky loans.

In a free market society, these loans would never be made.  But government, in its wisdom, guaranteed the loans by providing the money to special agencies. These government-funded agencies then created a thing called a "mortgage-backed security."   This "MBS" is a piece of paper that identifies a group of these risky loans and conveys an agreed percentage of the value of the loans to a private investor, at a guaranteed rate of interest, for a specified period of time, for a cash payment of a specified amount.  The government-funded agency then repays the investor at the specified rate of interest over the specified period of time from the payments made by the original borrowers.

For years, these risky, but government-insured loans have been repackaged and resold by the government-funded agencies.  When the original, unqualified borrowers began to default on their payments, and the government-funded agencies began to default on their payments to secondary investors, the government-funded agencies, as well as the private investors who relied on the credibility of the government-funded agencies, had to descend on the government for unprecedented bailout appropriations to make good the government- guaranteed loans.

This is a classic example of how government's effort to do something it thinks should be done, only makes things worse.  Government may have the power to grant a "right" of housing to every person, but it does not have the resources to enforce it.

The Creator granted to every living creature the right to life, liberty, and the pursuit of happiness; not a "right" to a house.  Government's efforts to outdo the Creator will end in disaster every time.

But government doesn't seem to ever learn.  The near collapse of the entire economy brought about by government's interference with the free market society is ignored by government.  Congressional leaders are quick to blame greedy capitalists for the problem, and ignore or deny that it is the government that must bear the brunt of the blame.

This crisis, however, is pocket-change, compared to the collapse that will inevitably result from implementation of the current government plan to manage energy use.  Government believes that it knows better than a free society how people should meet their energy requirements.

In a free market society, entrepreneurs would invest private dollars in the least expensive, most efficient energy source and make it available to consumers at the lowest possible price.  As those energy sources decrease, new sources would be developed by private investors in pursuit of profit.  This is how a free market society works.

The same ideology that demanded a "right" to housing from government is now demanding that government prohibit private investors from using the least expensive, most efficient energy source.  Led by this too-dumb-to-learn ideology, government is setting out to force private investors to use more expensive, less efficient energy sources, and to force consumers to spend more to get less. 

There are several names that describe societies in which government dictates what the market must produce and what consumers must buy; free market society is not among them.  America's, founders respected both the Creator and the laws of nature. The government they created was designed to obey both.  Instead, this government wants to deny the one, and repeal the other. ESR

Henry Lamb is the executive vice president of the Environmental Conservation Organization (ECO), and chairman of Sovereignty International.

 

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