Wednesday, October 9, 2013

Republicans who say defaulting is okay are lying; reflect a “good old boy underbelly” business culture

By Marc Jampole

If the topic is the potential impact of not raising the debt ceiling, how do you know whether Senators Richard Burr and Rand Paul and Representatives Justin Amash and Paul Broun are lying? Their lips are moving.

Representative Broun, Georgia Republican, says that Obamacare is the greatest threat to our economy, despite the many studies that show that the new healthcare law will save money because millions of newly insured people will go to doctors with symptoms instead of emergency rooms when very ill.  Obamacare thus adds money to the economy, something that is supposed to be good. By comparison, not paying all our bills will lead to hundreds of thousands of people losing their jobs, interest rates going up and foreign investors losing confidence in the dollar as the central financial pillar of the global economy. That’s all bad.   

Both Representative Amash, Michigan Republican, and Senator Burr, North Carolina Republican, point out that with tax revenues still coming in, we will still be able to pay the interest on all the various instruments by which the federal government borrows money. But what they don’t say is that other bills won’t get paid—and no one likes that. When you’ve lent a buddy money and he’s paying you back, but you hear he isn’t paying back his sister, don’t you get a little uneasy?  

Their claims are so outrageous that even the U. S. Chamber of  Commerce and the National Association of Manufacturers, as free-market and anti-government as organizations can get, are telling Congress to raise the debt ceiling.

Broun, Burr, Amash, Paul and other Republicans suggesting that default ain’t so bad all reflect a “good old boy underbelly” business culture that no one likes to talk about in the big slick business publications like Wall Street Journal, Fortune and Forbes. It’s the culture of living right at the edge of financial ruin, one step ahead of your creditors, but still in the game. Multiple bankruptcies, dragging out payments, trying to keep afloat with another loan, selling suspect goods, using slightly suspicious selling practices, maybe puffing up inventory a little or pledging the same equipment on two personal loans—these actions characterize this entrepreneurial culture, and it’s surprising how large it is.  The good old boy underbelly business culture serves as the real underlying cause of the real estate bubble that wrecked our economy: liar loans, sub-primes, bundling bad loans with good—all qualify as underbelly business behavior.

In popular entertainment—“Cadillac Man,” “The Goods,” “Fargo,” “Glengarry Glen Ross,” “Tin Men”—this business culture is associated with selling automobiles, real estate and siding, but in fact it’s not the business but the way the owner runs it that defines the good old boy underbelly culture.
Again, I ask you to personalize: Do you like doing business with these sharks? Why should banks, large multinational corporations and foreign companies be any different? They aren’t. They’ll do what any reasonable business person does when the risk of nonpayment is great—charge more.

Let’s also not forget about the millions of people whose lives will suddenly become much more challenging because they have been laid off or aren’t getting paid. It’s not just a matter of financial consequences. There are painful human consequences to refusing to raise the debt ceiling. 

In detailing the good old boy underbelly business culture I forgot to mention one thing: These business owners are all liars who lie frequently. Which brings us full circle to the Republicans who claim that defaulting on our bills won’t be so bad.

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