When Willful Ignorance Meets Economic Reality

Why is it that when voices from the political Left or Right discuss the likely repercussions of a default on the U.S. national debt there are voices raised in protest that the mere discussion of the topic is “fear-mongering?”  The implication is, of course, that this is irrational fear-mongering.   As noted in yesterday’s post, there are at least six probable outcomes of a default and all six are really bad.  So, why the irrational response to rational fears?

Consider the reactions to the pronouncement by the head of the International Monetary Fund that “The International Monetary Fund’s new chief foresees “real nasty consequences” for the U.S. and global economies if the U.S. fails to raise its borrowing limit.  Christine Lagarde, the first woman to head the lending institution, said on ABC’s “This Week” that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said.” [Politico]

What is almost more instructive than the IMF leader’s opinion is the nature of the responses in the “commentary” after the brief article. 

The radical Right  commenters displayed a tendency toward ad hominem attacks.  The IMF chief was a “European,” “…people overseas have their hands out for American money,” and there was this choice phrase: “Like the UN, the IMF is made up of a bunch of America hating, croissant eating useless socialists, who seek to exert their control over the United States and the rest of the world.”  The xenophobia is palpable.

One commenter provided the sum of all their fears: “This woman has ties to Chicago. Enough said. Scare tactics by the Left – and those overseas who constantly have their hands out wanting handouts from the U.S. and then are only too happy to criticize us. Maybe it’s time we take our medicine now no matter how bad it tastes – to prevent having to undergo major operations later which will hurt everyone. Socialist countries overseas are suffering now because they wouldn’t make the hard choices years ago. Socialism doesn’t work – and now they’re paying for it.”   This fairly well sums up the irrational reactions to rational issues.

There’s Guilt by Association, no matter how tenuous.  If the IMF chief once worked for the Chicago law firm of Baker & McKenzie dealing with international anti-trust and labor law issues, then her presence in the city automatically disqualifies her from any objective expertise.  Evidently being the first woman to become a minister for economic affairs in a G8 country isn’t enough to overcome her residence in Illinois.  Guilt by Association is a common form of Ad Hominem argument.

There’s Xenophobia,  “everyone” wants a hand out from the United States and then they have the temerity to criticize us.  First, not everyone wants a hand-out, although we are a generous people. Secondly, we can handle a little criticism.  We’re big enough.  What tends to become conflated in this simplistic attempt at logic is that the countries whom we do not support (Venezuela, Cuba) are the most critical, but receive little or no aid from us.  Explaining for the umpteenth time that foreign aid constitutes a micro-portion of the total U.S. budget doesn’t register with xenophobes.

There’s Economic Illiteracy.  There is a demonstrated lack of understanding that the “medicine” being advocated is toxic.   Both theoretical and historical economics indicate that the probable outcome of a U.S. default on debt obligations will be deleterious effects on the stock markets here and around the world, on U.S. credit availability both at the national and personal level, and there will be further destabilization of an already fragile recovery.

There’s Political Ideology.  Any mention of those deleterious effects is a Scare Tactic by the Left.  Overspending is conflated with Socialism.  Socialism is conflated with Democratic Party positions.  Ergo, anything which tends to promote or support a position taken by the Democratic Party must be Socialist.

We’re left with an interesting question:  Where did all this Ad Hominem, Xenophobic, Economically Illiterate, and Political/Ideological conflation come from?  The answers range from the academic to the observational.

A University of Kansas study found, “that political ideology and partisanship, trust in government and fellow citizens, and one’s view of the economy influence the degree to which audience members trust the news media. ”    Dr. Cynthia Boaz, Sonoma State University, has published a concise summary of the effect of Fox News broadcasting strategies which promote the problems listed above.   It’s been observed more than once that right-wing radio audiences are continually invited not to trust the national media because of alleged Liberal Bias.  The result appears to be the extraordinary level of mis-information displayed by the proto-typical commenter quoted above.

So what?

Yes, the United States of America includes some 30% of the total population who hold ultra-conservative views on a variety of subjects.  A portion of this approximate 30% are willfully ignorant on the subject of macro-economics and finance.  Having absorbed the right-wing propaganda to their cores they are unlikely to be swayed by additional  information, which may even serve only to reinforce their beliefs into very concrete forms.

The problem is that opposition to any increase in the U.S. debt ceiling without (1) maintaining tax cuts for upper echelon income earners, (2) privatizing Social Security and Medicare, and (3) deregulating the operations of major banks and energy sector industries, has found a home in the Republican Party.

Not only has this segment found a home, it gives some evidence it has the power to determine the grocery budget therein.

The Consequences Of Living In A Fact Free Environment

Pleasant to contemplate or not, the fact remains that the government of the United States has no statutory authorization to meet its debt obligations after August 2, 2011.  It is also a fact that the United States of America has no statutorily designated plan in place to prioritize debt repayments.   So, when the Secretary of the Treasury, JPMorganChase, and the head of the IMF say there will be negative consequences produced by a default, there will probably be negative consequences.

This hasn’t stopped Senator Jim DeMint (R-SC) from taking a hard-line stance.  “Republican Senator and Tea Party favorite Jim DeMint (R-S.C.) said on Sunday that Treasury Secretary Timothy Geithner has been “irresponsible” in talking about the debt limit, arguing the federal government could continue into August without a debt ceiling increase and not default on its loans. ” [HuffPo] Yes, we could “continue into August” which by my wall calendar is just over two weeks away.

The Tea Party appears split on the subject, with one side promoting a “No Debt Increase” pledge, and another advocating the “Cut, Cap, and Balance” proposal.  [The Hill]

It is hardly “fear mongering” to point out that in a bit over a fortnight the United States could default on its debt obligations.  Nor is it “fear mongering” to summarize and explain the consequences that might accrue. What would, indeed, be rational is to have the ultra-right-wing release the hostages, drop the xenophobic, ideological, and economically questionable weapons, and step quietly back from the debt ceiling issue.  What we need is an informed response to a critical issue — a clean vote on a clean measure to raise the debt limit of the United States of America.

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