Policy Crime and Punishment

October 15, 2013

A frequent question today on business talk radio and television asked about the likely financial and economic consequences if a U.S. default, even one in only a technical and brief sense, is not averted after Thursday, and the answers varied but for the most past were kept vague with good reason.  This is uncharted territory at least for the United States, which served heretofore as the lynchpin of the global monetary system.  Count me as one who thinks such a gamble would be catastrophically ill-advised, but I’ve also seen enough strange things in nearly 40 years of market watching to know that nothing is really 100% known in advance.

So I understand why there might be some people who think a temporary U.S. default wouldn’t have long-term consequences especially if the legislative tactic of default greases the effort to forge reforms that fix long-term fiscal imbalances.  That said, those people responsible for a default ought to face personal consequences if a default is forced on the country whether the severest consequences ensue or not.  A strong majority of opinion by informed people have warned of dire repercussions to U.S. credibility, exceptionalism and standard of living, not to mention collateral damage to the rest of the world.  In the face of such, those using the “default” threat to negotiate fiscal politics are at least putting the nation’s posterity at undue risk in return for securing a short-term battle victory.  This constitutes a policy crime against fellow citizens, and the ultimate results of the action do not exonerate blame any more than excusing attempted murder because it was unsuccessful.

The argument that lawmakers as duly elected representatives of the people bound to act as their constituencies request should also not exempt the politicians responsible for default from punishment.  Representatives are chosen by the people but morally called to Washington in order to act in the best interests of the nation, not that of just a sliver of the population.  The minority right of extorting the nation’s majority isn’t in the Constitution, explicitly or implicitly.

Impeachment doesn’t seem ample punishment to fit the crime by officials of rolling the dice on default.  More appropriate would be loss of citizenship.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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