Available Now! (click cover)

America's Counter-Revolution
The Constitution Revisited

From the back cover:

This book challenges the assumption that the Constitution was a landmark in the struggle for liberty. Instead, Sheldon Richman argues, it was the product of a counter-revolution, a setback for the radicalism represented by America’s break with the British empire. Drawing on careful, credible historical scholarship and contemporary political analysis, Richman suggests that this counter-revolution was the work of conservatives who sought a nation of “power, consequence, and grandeur.” America’s Counter-Revolution makes a persuasive case that the Constitution was a victory not for liberty but for the agendas and interests of a militaristic, aristocratic, privilege-seeking ruling class.

Saturday, July 30, 2011

Default ... or Renege?

Via Don Boudreaux, Roger Garrison notes that one cannot choose to default.

As he wrote to Boudreaux:

You mention, though, that the government could “choose to default.” Well, if default means that you’re unable to pay, then “choosing to default” must mean that you “choose to be unable to pay.” Hey, that really does sound like government-speak. But I think a more accurate and more revealing term is “renege.”

Speaking for myself, reneging in this case would to some small extent liberate the taxpayers from an unchosen obligation, so it would not carry the moral taint that private reneging on debt obligations does


Sheldon Richman said...

Roderick Long left this comment at another of my posts but it belongs here:

FWIW, Wikipedia seems to disagree:


To which I responded:

I noted on Facebook that the Wikipedia entry seems to contradict Garrison, but we should take care not to drop the context. No one in Washington is warning that the government will refuse to make a payment to the bondholders that it is able to make if the debt-ceiling deadline is missed. That would make no sense. Why would it refuse? Treasury Secretary Geithner has not hinted at that -- quite the contrary. Thus willful default isn't on the list of realistic possibilities. The clear implication of the warnings is that the government will be unable to pay. But we know that's not true because we know it will have enough tax revenue income to pay the bondholders. (Not that it should.)

The upshot is that Garrison is right in this context. He writes, "[I]f default means that you’re unable to pay [which is what people mean in this context], then 'choosing to default' must mean that you 'choose to be unable to pay.'"

Jeremy said...

I don't accept the argument that it's morally wrong to renege on a loan agreement with a corporation. The interest they charge is partially to compensate for the risk that you'll not end up discharging the debt obligation. There's no moral dimension; it's just business.

In other words, it might be a moral obligation if they gave me the money free and clear with a solemn promise to repay. But they're in business, and the idea that I should curtail my options to support their business model is absurd. That doesn't mean there won't be consequences for railing to honor a debt; just that to impose a moral narrative on top of it is nonsensical to my mind.