Lux Lucet

In his epistle to the Romans, Paul, commenting on the proper function of government, described the civil magistrate in this way, 

he is God’s minister, an avenger to execute wrath on him who practices evil (Rom.13:4).

For Paul, the job of government was to punish crime, not prevent it.  This was also the view of the founders of our nation, who established a system of limited, republican government that did not burden the people with endless regulations and red tape.  But as faith in the God of the Bible waned, and faith in the false god of the state grew, people began to demand more and more the government at all levels.  One of these demands was that the government take an active hand in the prevention of wrongdoing, and thus was born the modern regulatory state.

By way of example, I’ll reference something I recently came across while studying for my Series 6 securities license.  In the Kaplan course I used, I found the following paragraph,

Investigation of the conditions that led to the 1929 market crash determined that investors had little protection from fraud in the sale of new issues of securities and that rumors, exaggerations, and unsubstantiated claims led to excessive speculation in newly issued stock.  Congress passed the Securities Act of 1933 to require issuers of new securities to file registration statements with the SEC [Securities and Exchange Commission] in order to provide investors with complete and accurate information.

The impression left on the reader is that the cause of the crash of 1929 was the lack of proper government supervision of a rowdy, out of control securities industry.  The free market and limited government failed to protect investors; the state had to intervene.   This is perverse for at least two reasons.

No doubt there were then, as there are now, crooked brokers and financial advisers.  But this was not the cause of the crash.  The blame can properly be put on the incompetent central bankers (but I repeat myself) of the Federal Reserve, who erred in contracting the money supply too quickly after having expanded it too much earlier in the 1920s.  Monetary expansion created a bubble in stocks, and when the Fed cut off the money supply, the bubble deflated, leading to the October 1929 crash.  But just as it’s easier today for politicians to heap blame oil companies for high gas prices rather than admit that their policies are largely responsible, so it was easier then for Congress to point the finger at securities dealers instead fessing up to its foolishness in creating the Fed. 

Second, regulating everyone to prevent the wrongdoing of a few violates the biblical principle  no crime, no punishment. The Old Testament required thieves to pay for their crimes, not by jail time, but by restitution plus 20% to their victims (Lev.6:1-7).   The system was just, applying punishment to the guilty and leaving the innocent alone.   On the contrary, the regualtory dragnet ensnares everyone, punishing the honest as though they were guilty, all for the sake of preventing some unknown future crime by some unnamed future ne’er-do-well.   And this is far from biblical justice.