A Doctrine of Courage

When legislation is passed through the American Congress or policy is instituted by the Executive Branch that does not adhere to the Principles on which America was founded, but is based on false doctrines like the separation of church and state, the States of the Union and local governments have a duty not only to ignore, to disobey, but also to nullify the laws and/or policies that the federal government is attempting to enact. This is the embodiment of a real and true doctrine: the Doctrine of the Lesser Magistrates.

It is a little known doctrine that has been used throughout history to thwart, or stop, those who would use their power to impose unjust laws or decrees. The Lesser Magistrate Doctrine declares that when the superior or higher civil authority makes unjust or immoral laws, the lesser or lower civil authority has both a right and duty to refuse obedience to that superior authority, even to the point of actively resisting. For example, if Congress, the President, or the US Supreme Court makes an unjust or immoral law, a state legislature or Governor could stand in defiance and refuse to obey or implement it. Even a city council, mayor or sheriff could appropriately defy an unjust law or decree handed down by any higher authority. The best summary of this doctrine is illustrated by Roman Emperor Trajan who, while appointing a subordinate authority, handed him a sword and said, “Use this sword against my enemies, if I give righteous commands; but if I give unrighteous commands, use it against me.” Historically this doctrine was practiced before the time of Christ, but it was Christian men like John Calvin, Christopher Goodman, and John Knox who embedded it into their political institutions throughout Western civilization.

Economics 101

 Don’t overlook the basics of free enterprise

BY: Fred Hayek for Joshua’s Warriors

Recent reports have declared the United States a breeding ground for a nation of illiterates in geography, science, and mathematics. Add one more to the list: economics. A study of exit exams indicated that 75% of college-bound students were unable to define the effects of inflation (rising prices) and what constitutes a government budget deficit (government spending exceeds revenues).

George Bernard Shaw quipped that if all economists were laid end to end they would not reach a conclusion. Still, wouldn’t you agree that given the current economic malaise and government’s massive intervention into the market place, we ought to know more about economics?

With the middle class stuck in neutral and our markets and economy stagnating, one would think that we all would be digging out our Economics 101 text books. If we do, we may run across a guy named Adam Smith, who in 1776 published a collection of his writings that formed the moral foundation of the American free-enterprise system.

“An Inquiry into the Nature and Causes of the Wealth of Nations” is a systematic presentation of modern capitalism. Economic freedom (free enterprise) was a unique idea back then. It may become unique again. Without the freedom to try, freedom to buy, freedom to sell, and the freedom to fail, economies can become hamstrung.

It is these very freedoms that motivate self-sufficiency, innovation and risk taking — America’s economic strong points. Our Founding Fathers embraced Smith’s ideas and the moral basis behind them, and within 100 years America became the most prosperous nation on earth with the largest middle class.

Capitalism is a sacrifice of consumption today for a greater reward in the future. Smith demonstrated that a self-sufficient society creates excess production (savings) that can be employed as capital (stock). Excess savings may be lent to a bank or business or invested. A bank or business will then invest the sum as capital or loans to others who may in turn purchase capital. Money is valueless without goods or services for which it can be exchanged. This dynamic is called “the great wheel of circulation” and why every “frugal man is a public benefactor.”

Smith would argue that government should be in the business of fostering a legal and regulatory environment where capitalism can thrive and everyone is treated equally. In other words, when it comes to the economy, a decrease in central planning brings an increase in results. However, that is hardly the case today. Even if government’s intentions are good, centralized decision making and regulation by the best and brightest has a poor track record..

It is ironic that just fifteen years ago talk was the U.S. was entering an era of “permanent prosperity.” Encouraged by government policy and artificially low interest rates, financial firms borrowed billions of dollars to make big bets on esoteric mortgage securities creating the biggest financial bubble in human history. When the bubble burst, bets went sour, and overnight we found ourselves in the Great Recession. The President promised that “government must step in boldly when free markets run amok” and he delivered. If Adam Smith would have been an economic advisor to the President he would have argued that by avoiding short term pain more severe pain would follow; that picking winners (Wall Street) and losers (middle class) is morally wrong.

What’s next remains to be seen, but we would all do well to get to know Mr. Smith and why the founding fathers leaned on his then revolutionary ideas. Maybe the text book could be titled: “Economics 101, back to the future.”


Fred Hayek is a retired security analyst/portfolio manager.