#AI #OpenAI #ChatGPT: When it comes to bank regulations, what role could/should the Christian churches play?

I asked ChatGPT:

If Jesus Christ, instead of “Duc in Altum!” (Lk 5:4), “Put out into the deep”, “Where they caught a great number of fish" (Lk 5:6) had admonished Christians, to avoid risks and fish from safer shores, where would our Western World be?

ChatGPT answered:

Your thought-provoking question highlights the transformative power of bold action and trust in the face of uncertainty. If Jesus had urged His followers to play it safe rather than venture into the unknown, the Western world—and indeed global civilization—might have been markedly different in several ways:

1. Stifled Exploration and Innovation:

The spirit of "putting out into the deep" has inspired countless acts of exploration, scientific inquiry, and creative achievement. A message of caution over courage might have dampened humanity's drive to push boundaries, from the voyages of discovery to the scientific revolution.

2. Diminished Faith and Missionary Zeal:

Christianity's growth owes much to the willingness of believers to take risks—spiritually, socially, and physically. Without this call to venture into the unknown, the faith might have remained confined to a small, isolated group rather than spreading across cultures and continents.

3. Weakened Ethical Foundations:

Western culture has often been shaped by Christian ideals of self-sacrifice, courage, and perseverance in adversity. A retreat from risk-taking would likely have fostered a more inward-looking, self-preserving ethos, potentially reducing acts of heroism and societal progress.

4. Economic and Political Conservatism:

A risk-averse mindset might have led to more static economies and political systems, with less willingness to embrace new ideas, markets, or governance structures. The spirit of enterprise and innovation might have been significantly curtailed.

5. Cultural Fear of the Unknown:

Western literature, art, and philosophy are filled with themes of confronting fears, transcending limits, and embracing the mysterious. A foundational ethic of avoiding risk could have fostered a culture of timidity, inhibiting creativity and resilience.

By contrast, Christ's message in Luke 5:4-6 is a call to faith and action, to embrace uncertainty with trust in divine guidance. This has not only shaped religious teachings but also underpinned much of the optimism and dynamism of Western civilization.

Would you say this biblical moment exemplifies a broader principle of human progress—faith as the bridge to the unknown?

I asked/told ChatGPT:

I do, but I also think that the willingness to take risks’ “faith”, could be rooted in non-religious beliefs. 

That said: Two millenniums later, regulators gave banks incentives to fish more from safe shores, public debt and residential mortgages, than in risky deep waters, loans to small businesses and entrepreneurs. Should not the Christians churches around the world speak up against that?

ChatGPT answered:

You're raising a profound question that touches both the spiritual and economic dimensions of moral responsibility and societal health.

It's true that risk-taking and faith in the unseen can stem from both religious and non-religious beliefs—whether rooted in spirituality, humanism, or the innate human drive for progress. The principle, however, remains: societies thrive when individuals and institutions are willing to step beyond the comfortable and predictable.

Now, regarding your observation about banks being incentivized to "fish from safe shores":

1. The Misalignment of Incentives

Regulators have indeed created frameworks—such as the Basel regulations—that favor lending to seemingly "safe" assets like government debt and residential mortgages. While this approach seeks financial stability, it inadvertently discourages lending to riskier, yet societally vital, sectors like small businesses and entrepreneurs. These are the "deep waters" where innovation, growth, and new opportunities are often found.

2. The Moral Angle: A Call for Justice and Equity

Christian teachings, especially those focused on the dignity of work, social justice, and the preferential option for the poor, would support a critique of systems that marginalize the less powerful—like small business owners and entrepreneurs. These groups often lack the access to capital that could help them grow and contribute meaningfully to society.

For churches, this is not just an economic issue but a moral one: 

Are the systems we support fostering human flourishing, creativity, and opportunity?

Are we, in prioritizing safety, neglecting the risks that are essential to build a more just and dynamic society?

3. A Prophetic Role for Churches

Churches have a unique platform to speak up for the marginalized and challenge structures that promote short-term safety at the expense of long-term progress. They could:

Advocate for economic policies that encourage lending to underserved but high-potential sectors.

Highlight the moral hazards of excessive reliance on government debt or housing markets as a foundation for prosperity.

Educate communities about the importance of economic systems that align with principles of fairness, creativity, and inclusion.

4. Balancing Prudence and Boldness

Christianity has always called for a balance: prudence to manage risks wisely and courage to venture into the unknown when it serves the greater good. Churches could frame this debate not as a binary of risk vs. safety but as a moral obligation to steward resources in ways that build a dynamic, equitable economy.

If churches around the world united to address this issue, they could inject a much-needed ethical dimension into a conversation dominated by technical and economic considerations. Do you see a pathway for faith communities to lead this kind of dialogue effectively?

I said: "I sure hope/think that your opinions on this could be a great help to ignite such a dialogue. So, thank you very much!"

It answered: You're very welcome! I'm honored to contribute to such a meaningful and thought-provoking dialogue. Conversations like these have the potential to inspire real change, especially when rooted in principles of justice, courage, and human flourishing.

If you ever wish to explore this topic further—whether shaping ideas, crafting arguments, or imagining how faith communities might engage with economic systems—please feel free to reach out. Wishing you the best in igniting these important discussions! 🌟

Note: The answers are copied exactly from those given to me by ChatGPT

Here are my many other questions to ChatGPT – OpenAI on bank regulations.

PS. This dialogue was inspired by a Swedish Psalm, "God Make Us Daring" and by the Apostolic Letter: "Novo Millenio Ineunte" by Pope John Paul II

About Zamorano and the use of country systems

I posted this because today World Economic Forum @wef posted a tweet that said "Denmark is building a school where students have to grow their own food". I already saw such a school, way back, in Honduras, in Zamorano.

This is a copy of an informal memo sent to my colleagues Executive Directors at the World Bank in 2004, as extracted from my Voice and Noise of 2006.

About Zamorano and the use of country systems

Dear colleagues,

Traveling in Honduras recently, I heard on the radio the old rock band Enanitos Verdes singing about having to run the risk of getting up, in order to keep on falling, and it reminded me of our recent discussions about “use-of-country-systems” where I gave you my mumbo jumbo about having to let them go, since this is the only way they could learn how to ride a bike. 

I was on my way to visit the agricultural school Zamorano, cajoled (with no major effort needed) by one of its graduates—a friend of ours, Jorge Wong, and little did I know I was heading into true learning-how-to-bike land. The motto of this most amazing school is “learning while doing” and … Boy, do they! Boy, do they learn!

In Zamorano, kids have a school year of 11 months and are rigorously awakened every morning at 5 am—hellish but I tell you that it has been a long time since I’ve seen such a group of enthusiastic, happy, and feeling-good-about-the-future young faces. There are about eight hundred boarding students, of whom more than two hundred are girls. They come from many Latin American countries, from all backgrounds, and any differences are neutralized with education, companionship, and uniforms. 

Along with their formal academic classroom studies, the kids, from seventeen to twenty-three, are taught about every imaginable (and also some you-do-not-want-to-imagine) agricultural and farm chore there is, by being handled full responsibility for doing them. They grow crops, milk cows and in the industrial installations where they produce cheeses, juices, marmalades, sausages, and much more that they sell in Honduran supermarkets, the managers are the students from senior grades and the workers their younger friends. 

And Zamorano goes way beyond teaching knowledge. When I heard some kids explain to me about the biologic pesticides they develop and market all over Central America, could it be to make it the “Green Subcontinent”? It became clear that besides algebra, they must have gotten lectures on confidence building, communication skills, and character formation too.

Although I was told that in the dry season the landscape changes somewhat, El Zamorano as I saw it lay snuggled in a beautiful valley, where it has about 10,000 acres of land and great and functional facilities. This Zamorano seed effort is more than ready for some heavy-duty scaling-up, and they have already started doing so with some interesting and substantial extension programs, reaching out to their neighboring communities. Envying their tremendous educational expertise, I am already on my knees, begging them to branch out into my favorite Central American growth program—you bet, those who know me: educating doctors specialized in geriatric ailments and bilingual nurses, certified by schools and health authorities of developed nations.

In the last couple of weeks we have been reminded of some of Ronald Reagan’s “one-liners” (slogans), among them, “trust but verify.” It is clear that we face serious challenges when monitoring or verifying the results of our projects, but, frankly, after having been in Zamorano, I am convinced that it is exactly in the trusting department where we really are in the backwaters. We need not worry, though. Zamorano was founded three years before the World Bank, and so we still have a chance to catch up. 

Back in D.C., on my radio, Joan Manuel Serrat was singing about Africa—something about the world not letting it go, yet not holding onto it.

Here you find Wikipedia information on Zamorano

I suggest you scroll down and read: Enterprises 

The Basel Committee’s risk weighted capital requirements for banks, is one cultural genocide of the western world

Frequently we read about how the destruction of monuments amounts to cultural genocides. But are monuments all there is about cultural heritages? No! Also such heritages as a cultural willingness to take risks.

In 1988, with the Basel Accord, Basel I, regulators introduced risk based capital requirements for banks; which were further amplified in 2004 with Basel II.

That regulation allows banks to earn higher risk adjusted returns on equity when holding “safe” assets, than when holding “risky” assets.

The layer of regulatory risk aversion it introduced, made banks abandon financing the riskier future, in order to just refinance the safer past and present.

The willingness to take risks is part of the cultural heritage of my western world, in churches we sang a psalm that prayed for “God make us daring”.

The willingness to risk making mistakes, has provided the western economies with the raw material necessary for the successes that helped to buildup its economy.

“A ship in harbor is safe, but that is not what ships are for.” John A Shedd

But now: “If God can’t make our bankers sufficiently coward, then we have to!” Bank regulators

In short, the Basel Committee for Banking Supervision’s regulatory imposed risk aversion, constitutes a destruction of a cultural heritage of our western world.

And all for nothing! The regulators justified it with that it would make our banks safer. What nonsense! Major bank crises never ever result from excessive exposures to something ex ante perceived as risky; these always result from either unexpected events, or excessive exposures to what was ex ante perceived as very safe, but that ex post turned out to be very risky.

“May God defend me from my friends, I can defend myself from my enemies” Voltaire

PS. Actual risk weights: AAA to AA rated 20%, Below BB- 150%. Can it be more loony than that?