Three Mountains (15) - Big Push Down

The Kingdom of God will collapse the wealth mountain. Wealth will pushed down and spread around to local families for the benefit of local communities.

When Christians get serious about dealing with poverty, we will have to find ways to share capital. Interest free loans are one way of transferring capital, but we will need to find others that work in the modern world.

Jacob and Laban were both shifty operators, but they do provide an example one person helping another to build up their capital. When Jacob went to live with Laban he owned no capital. Laban capitalised Jacob's wages by paying him with breeding ewes. Jacob was able to build up his own flock, without neglecting Laban’s flock. Jacob also learned how to care for his flock. This was an early win-win situation.

Christian business operators could look for ways to help some of their employees build up their own capital. Shares for salary is one possibility, but it would better to provide employees with capital that would supplement their skills and equip them to start their own businesses.

Christians should not hand out money and property willy nilly. Deacons have an important role in ensuring that wealth is not wasted. They will direct capital to those who could use it wisely. They will teach poor people how to live carefully and productively.

Many Christians are looking for a great wealth transfer. They have not seen it, because they are looking in the wrong place. The big wealth transfer flows down the wealth mountain.

Three Mountains (14) - Solutions to Inequality

Inequality of income becomes a festering sore the weaken society. Secular societies have come up with two solutions to inequality.

1. The most popular solution to inequality is progressive taxation. This solution is immoral. There is not moral basis for confiscating the wealth of the rich and giving it to the poor. The other problem with this solution is that progressive taxation destroys many of the incentives that have made free-market capitalism so productive.

2. The other popular solution is revolution: shoot the rich and let the poor grab what they can. This solution is immoral and destructive. Revolution destroys the productive capacity of a society, so it generally makes everyone worse off.

Secular solutions to inequality have failed. The Bible provides two solutions.

1. In Old Testament times, the main form of capital was land. The Jubilee laws ensured that land remained reasonably evenly distributed across the entire population. If a family became poor and sold their land to settle debts, the purchaser of the land was required to return it to the original owner in the jubilee year. This mean that the distribution of income generated wealth was distributed evenly again at the beginning of each new generation.



2. The New Testament brought an even better solution to the problem of inequality. Acceptance of the gospel of Jesus leads to a great outpouring of giving that can counteract the flow of wealth from the bottom to the top. The gospel creates a continuous voluntary Jubilee.

Paul explained God’s will.

Our desire is not that others might be relieved while you are hard pressed, but that there might be equality (2 Cor 8:13).

God does not want those who have much to get more and those who little to get less. He prefers the opposite; that everyone should have what they need, and no one should have more than they need.

Three Mountains (13) - Wealth

Free market capitalism has solved the production problem. It allowed human initiative and inventiveness to flourish. The accumulation of capital has massively increased human productivity. Free trade has supported a greater division of labour. These factors have massively increased the wealth of the western world. We have moved from a life of subsistence to a world of prosperity in a couple of centuries.

There are now thousands of high wealth individuals in the world. They hold a huge share of the wealth that is produced in the world.

The problem with free market capitalism than wealth tends to be concentrated in the hands of a few.

1. Efficient entrepreneurs are rewarded with increasing wealth. That is as it should be. Many use the increase in wealth to expand their enterprise.

2. Wealth flows to those who already have wealth. Those who inherit wealth will find it much easier to increase their wealth than those with none. Wealth begats wealth.

3. The corrupt, crafty and unscrupulous will often do even better. They will often manipulate and swindle the less misfortunate to defraud them for their own benefit.

4. When wealthy people collude with political rulers, the flow of wealth to the rich and powerful is really boosted.

5. Some wealth flows down to those at the bottom, but the flow up is far greater.

6. When governments produce economic depressions, the poor suffer most.

Secular capitalism increases the wealth of most people in society, but it also produces increased inequality.

Three Mountains (12) - Risk is Real

Risk is unavoidable for people who are finite and free. God has made us free, so we have to make decisions. We are finite, so do not have perfect information on which to base our decisions. Hindsight is more perfect, so it proves many of our decisions wrong. An important aspect of decision-making is minimising the risk of bad consequences.

Risk cannot be eliminated, but it can be transferred to others.

• Insurance is tool for minimising the risk carried by one person, by sharing it between a much larger group.

• Limited liability transfers some of the risk of business failure from the owners to the clients of the business.

• Financial derivatives can be used as tool for transferring risk from one institution to another.

• Deposit insurance shifts risk from the banks to taxpayers.

Governments attempt to eliminate risk, but they actually transfer it to other people. Their regulations often encourage people and institutions to ignore risk.

The Global Financial Crisis was the result of bad judgement based on failure to understand risk. This foolishness was widespread throughout the economic and political system (see Credit Crunch Characters).

• Households took on massive risk by paying ridiculous prices for houses, because they assumed that house prices would keep up going forever.

• Households took on big mortgages assuming rising prices eliminated the risk.

• Governments encouraged banks to ignore risk and give mortgages to people who could not afford them.

• Banks assumed that insurance against default had eliminated the risk, so they purchased these financial instruments as if they were risk free when in reality, they had swapped one form of risk for another.

• Financial institutions bought CDOs, assuming that clever mathematical models had eliminated all risk.

• Investment banks boosted their profits by being levered up to thirty to one, but ignored the risk of a decline in asset values.

• The risk of a large monoline insurance company failing was ignored.

• The risk of that credit ratings agencies might be wrong was wrong.

Foolishness and stupidity were rampant in the financial system, but good times make fools appear wise, so risk was totally ignored.

Foolishness cannot be eliminated regulation. Regulations cannot stop foolish behaviour. The only cure is for people and institutions to get a better understanding of their risks and make mitigation.

Better banking is a key. Two questions should be asked before a loan is made.

• Will the borrower be able to pay the interest and repay the loan when it comes due?

• What assets is the borrower offering as collateral for the loan?

These questions have been forgotten over the last decade, but they will become more important again. To get finance, businesses and households that demonstrate an ability to make the repayments will be able.

Three Mountains (11) - Different Ways

Different ways of doing business will emerge in the kingdom of God.

• Giving
• Try before you buy
• Pay what you can afford
• Pay what you owe
• Pay what it is worth to you (give up economic rent).
• Integrity in advertising
• Changed Production (No military industrial complex)

Three Mountains (10) - Low Interest Rates

In the Kingdom of God, high levels of thrift and declining demand for loans will cause interest rates to fall. A sound banking system will eliminate inflation, so savers would not need an inflation premium to compensate them for the rampages of rising prices. As honesty increases, the risk premium will disappear, so interest rates will decline.

As business becomes efficient, the prices of goods and services should gradually fall. Real interest rates will be positive, even if the nominal interest rate is near zero.

The level of interest rates is mostly determined by the value that people place on the future. When people live for the present with no hope for the future, interest rates rise. High interest rates are the sign of a sick culture. On the other hand, if people have confidence in the future, they will not need much compensation for saving, so interest rates will be low. The Kingdom Economy will bring huge confidence in the future, so the time preference premium will be low. A strong future orientation will reduce interest rates.

More on this topic at Interest.

Three Mountains (9) - Thrift

The use of thirty-year mortgages to buy houses is wrong. In recent years it has become possible and common for people to borrow up to ninety percent of the purchase price of a home on a mortgage. This has the effect of pushing up the price of dwellings dramatically. The result is that households in total are no better off. They still hold the same stock of housing, but have much greater debt. The consequence is that they will pay for their houses two or three times over in interest. This shifts tremendous wealth to the banks.

If borrowing such large amounts were unacceptable, the price of houses would fall dramatically. Households would be better off, and they would still have the same total number of dwellings.

Citizens of the Kingdom of God will be thrifty. They will know that the person who consumes all that they earns becomes poor (Prov 14:4; 21:29). Ideally, Christians should not be in debt at all. As God blesses them, they should be quickly able to repay all loans and build up their capital. Most Christians will be debt free.

In a Christian society, the main source of funds for lending will be people saving for their old age. Savings for unforeseen circumstances, such as sickness, accident, and death will also be important. Thrift will produce a surplus of resources that are available for investment in productive activities. Increased investment will make everyone more productive. Poverty should be quickly eliminated.

Christians will put most of their surplus funds into enterprises that will be productive for the Kingdom of God. They will then have control over what is done with their money (II Cor 6:14-15). They will ensure it is used for the glory of the Kingdom. For Christians, lending for interest is a second-best option, as they have no control over what the banker does with their money.

Three Mountains (8) - No Long-term Debt

The Kingdom of the world says that debt is efficient. The world economy is based on debt.

The Kingdom of God sees debt as dangerous, because the borrower becomes the slave of the lender.

A key biblical principle is that all loans should be short term. The reason for this principle is that no one except God knows the future. Since we do not know the future, we should not make contracts that bind the future. The future is the Lords. He will not allow us to commit ourselves beyond the immediate future.

God says the maximum time that we can bind ourselves for is seven years. No one should borrow more than they can repay in that time (Deut. 15:1-3; Ps 37:21). Beyond seven years, we do not know what our situation will be. Therefore, we cannot be certain that we will be able to repay the loan. An honest person does not make commitments that we may not be able to keep. We do not know if we will be living or what our situation will be in thirty years’ time, so thirty-year mortgages are dishonest. All loans and deposits should have a term of less than seven years.

Even if principle of a seven-year limit on loans is not accepted, the matching rule will push long-term interest rates up too high for people to risk taking long term loans. The seven-year principle will come about by default.

Most loans will be business loans. Christians should do their best to stay out of debt, so borrowing to buy consumption goods should be avoided. We should only go into debt as a last desperate solution to poverty, because a borrower is a slave of the lender (Prov 22:7). A lender is able to control those who are in debt to them. God wants his people to be free to obey him. If we are in debt, we do not have that freedom.

Borrowing to buy capital goods that are productive is legitimate for Christian businesses. Capital goods will produce a return to the borrower, which will cover the cost of the interest. On the other hand, Christian businesses should only borrow to get started. As God blesses them, they should quickly get debt free, so that they are free to fulfil the purposes of God. Expansion of the business will be done out of retained profits.

Christian business will try to get rid of debt.

Let no debt remain outstanding, except the continuing debt to love one another (Rom 13:8).

If they are obeying God, then Christians should be in a position where they can lend to others.

The LORD will bless all the work of your hands. You will lend too many nations but will borrow from none. The LORD will make you the head, not the tail… you will always be at the top, never at the bottom (Deut 28:12-13).

Long-term indebtedness is a sign that God’s blessing has been lost, through failure to trust him or obey his Word.

Three Mountains (7) - Cooperation not Corporation

Corporate structures will change dramatically in the Kingdom Economy. Large conglomerates will be less viable, because the risks of investing in them will be too high without a limited liability laws. Growth for the sake of growth will not be a viable business model. Most big corporations will be replaced by a several smaller businesses cooperating to achieve the same purpose.

The benefit of the big corporate model is the ability to control huge resources and complex processes. This is the devil’s method. He works through manipulation and control.

Cooperation will be more important than control in the Kingdom of God. Jesus spreads authority around and relies on the Holy Spirit to coordinate numerous people to achieve a common purpose.

As big businesses wither away, control and ownership will be replaced with cooperation and contracts. For example, a business that operates large, complicated, resource-intensive processes will not be able to bring every aspect of these processes under its control, as the risks would be too large. Instead of owning and controlling every aspect of the production process, they will manage them through contracts with many suppliers and service providers. Their role will change from controlling everything to coordinating the overall process and managing relationships with a network of supporting businesses.

The modern economy is dominated by highly-visible big businesses. In the Kingdom Economy, businesses will be so small and numerous as to be almost invisible. The authoritarian managers with the big egos that control many big corporations will be redundant. They will be replaced by managers who can manage cooperation with many other businesses. Smaller businesses will be the norm in the Kingdom economy.

Three Mountains (6) - Capital

Capital goods are important, because they make humans more productive. Capital and trade are the keys to escaping subsistence.

Economists distinguish between capital goods and consumption goods. The word capital is used to describe goods that can be used to produce other goods. A spade is a capital good. You cannot eat it if you are hungry, but you can use it to produce food. Capital goods include machinery and factories.

Consumer goods cannot be used to produce other goods. They produced for household or personal in satisfy human wants and needs. A banana is a consumer good. You cannot use it to make things, but it will satisfy your hunger. Some goods are both capital and consumption goods. When I use my computer to write articles, it is a capital good. If I play games on my computer for entertainment, it becomes a consumption good.

In Jesus time, the most important capital good was land, but oxen, donkeys, fishing boats, nets and builders tools were also important. A family with a fishing boat and nets could feed and clothe themselves, whereas those without some capital might be destitute. In modern times, capital has become more complex. The capital of an airline is its aeroplanes. The capital of a courier business is its vans and computers.

The wellbeing of a community is largely determined by the volume of capital goods available. A society with no capital goods is forced into subsistence. A society with capital good will have a better lifestyle.

God blesses capital when it is acquired righteously and used wisely.

The crops of your land and the young of your livestock—the calves of your herds and the lambs of your flocks will be blessed. Your basket and your kneading trough will be blessed (Deut 28:4-5).

Cattle, flocks, baskets and kneading troughs are capital equipment that make people more productive in their work. God promised to bless capital that is used wisely.

Modern corporate capital to be rootless and with no loyalty except to itself.

Roaming throughout the earth, going back and forth on it (Job 1:7).

The shareholders of a modern business may be scattered all over the world, so the business has no loyalty to any community. Modern business managers tend to be cosmopolitan. As they climb the corporate ladder, they often have to live and work in different countries, so they tend to have more loyalty to their business than to a particular place.

Modern business concentrates huge amounts of capital equipment in a single place to achieve economies of scale. Businesses tend to gather together in the same place, often close to energy sources or their clients. Electricity and electronic communications remove many of the reasons that business concentrate in the same place.

As the influence of the Kingdom of God spreads in society, we should expect to see more capital goods being spread out in local communities and being owned by families. The owners of a family capital will have a loyalty to the community in which they live. They will use it to provide employment and income for people of their community. The families in a wider community may pool their capital into a larger company to achieve the necessary scale, but they will retain ownership of the capital as a family heritage.

Christian have a huge amount of wealth tied up in superannuation schemes and banks. This wealth is used to provide capital in other countries, often in China. They should seek ways to use this wealth to build capital in their local communities, where it will provide employment and blessing to the people they are related to.

More on this topic at Capital.

Three Mountains (5) - No Collusion

To succeed in the Kingdom Economy, businesses will have to provide goods or services that people want. A business cannot force people to buy things, so if people do not want their products, the business will fail.

A major problem with the modern economy is that businesses collude with the government to obtain a privileged position. Most business regulations have the effect of protecting an incumbent business from competition. Businesses frequently ask the government to protect them from competition from imports. They always claim to be acting in the interest of their nation, but the owners of the protected business always benefit the most.

Collusion between business and government is always dangerous. When a business gains the support of the government, it is able to use the coercive powers of government to change what consumers buy. This may be good for the business, but consumers lose their freedom. As the Kingdom of God advances, the central government will wither away. Collusion between business and government will become impossible.

Three Mountains (4) - Corporate Mountain

Modern corporates have immense power and control.

They have produced great wealth, but have also done enormous harm, when they made bad decisions.

Large corporations do not emerge naturally, because the accumulation of risk is too scary for anyone to contemplate. They were made possible when the government mountain established limited liability laws and other laws that protect big business.

Limited liability laws have allowed corporations to operate on an enormous scale, because individual shareholders are not accountable for the corporation’s debts or losses. Although these laws have fostered business, they are immoral, because they transfer risk of bad decisions from those responsible to the innocent. Unlimited profit with limited losses sounds great, but is morally flawed.

When governments pass limited liability laws, they are attempting to do something they do not have the power to do. Liability can only be removed when someone pays the price. Jesus was able to wipe out the liability for sin, because he paid the penalty on the cross. Governments attempt to wipe out liability by simply decreeing that it will be limited. They do not have that power, because they are unwilling to pay the price.

Government laws do not eliminate the liability for business losses, they just shift it to other people. When a limited liability company goes broke, the owners walk away with limited losses. The rest of the losses do not disappear. They are borne by the creditors of the failed company. The clients and employees of the failed company have to bear the cost, even though they acted in good faith.

Limited liability laws foster bad decision making by encouraging excessive risk taking and short-term profit making. Businesses that run large risks can earn big profits without worrying about the risks. Shareholders can earn enormous dividends from a company that takes excessive risks, but limit their losses during the bad years that usually follow. Unfortunately, the losses are not eliminated. The losses are just passed to other businesses that bring real benefits to society. Everyone is harmed.

God holds us accountable for our actions. Jesus died on the cross to eliminate our liability for our sin. He could not wipe that liability by amending a law, but had to carry the full cost. In the Kingdom economy, businesses owners and company shareholder will carry full liability for their losses and liabilities.

Without limited liability laws, businesses would have to be more careful about the way that they operate. Boards of directors would have to be more careful in scrutinising the actions of company management. Better stewardship would result (Luke 14:28-29). If investors bare the full costs of any failure, they will estimate the costs and assess the risks very carefully and make better business decisions.

The “Too Big to Fail” banks were created by a combination of limited liability and government financial regulation. The rot set in when they switched from being partnerships risking their own wealth, to limited liability companies risking other people's wealth. The shareholders of the investment banks and hedge funds who have taken enormous dividends would have put far greater constraints on their mangers, if they knew they were liable for all possible losses of their companies. The profits that they took in the good times would no longer be sheltered in the bad times.

As the Kingdom of God expands, businesses will shrink. Some will collapse. Others will choose to change their capital structures.

Three Mountains (3) - Goverenment Collapse

Governments are collapsing under the pressure of impossible promises. This is why restoring our societies from the bottom up is so important.

Modern Governments have been making impossible promises that cannot be delivered.

• Full employment
• Health care
• Pensions
• Casting out demons.

Massive sovereign debt is a sign that this mountain is getting shaky.

Furthermore, the Government Mountain has left us with serious problems that make any situation worse.

• Controlled interest rates
• Manipulated money system
• Flawed banking system.

These problems have added to the instability

The rise and fall of nations is inevitable. Deuteronomy 28 speaks of curses and blessings on rebellion and obedience. The modern monetary system exaggerates the effects of any curses.

The collapse of the government mountain will cause huge economic pain.

Economic collapse will not be universal. Some countries will sink but others will continue to grow.

Some commentators are saying that that the United States is finished; that the dollar will collapse and die. The situations is not that simple. Some local and state governments will collapse. The federal government will corrode, not collapse. It will continue to grow and become more powerful. Like the Roman Empire in its later stages, it will demand more and more tax to fund its military adventures, but give very little back to local communities. America will eventually become the greatest empire the world has ever know, and not necessarily for good. When it does eventually collapse, as all empires do, it will cause enormous economic pain.

Government is not the key to the Kingdom. As kingdom expands, government authority will be fractured apart and pushed down to ordinary people.

We must learn how to handle this authority God’s way.

Three Mountains (2) - Goverenment Mountain

The last two centuries have seen an enormous increase in Government power. Modern governments have unprecedented authority and power to impose it. Traditional empires were ruthless in killing people and seizing power, but they had very limited objectives. If the empires border was secure and wealth continued to flow to the centres of power they were content. They had no agenda for reforming society.

The Roman empire provided “bread and circuses”, but they were joking about the bread. They preferred people to be hungry, as they would be less likely to reveal. Nebuchadnezzar would be shocked that Obama is worried about 12 percent unemployment.

Modern governments have far greater power. They are able to control over every aspect of life, but the have much greater agendas too.

Human government is collapsing. It is rotting from within as power corrupts character.

Democracy empowers inadequate people.

• If they can work the system, they will be unsuitable for power.

• If they are suitable for power, they get chewed up by the system.

The job of leading has become too big for one person. Bush and Bama are examples.

Three Mountains (1)

The Holy Spirit is at work to expand the Kingdom of God throughout the earth. In the next few decades, we will see a greater release of the kingdom being manifested.

I see three mountains.

These mountains must fall away before the Kingdom of God can come. John said,

Prepare the way for the Lord, make straight paths for him.
Every valley shall be filled in, every mountain and hill made low.
The crooked roads shall become straight, the rough ways smooth.
And all people will see God’s salvation (Luke 3:4-6).