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Of Ozymandias, Eudaimonia and Debt

July 6, 2011

As deliberations over the debt limit become increasingly mired in the debate over strategies to reduce the federal debt, the previously unthinkable possibility of a U.S. government default looms larger by the day. Up until now, homeland security practitioners seem to have been more concerned with whether or not negotiators would touch their pet programs than whether the damage caused by a prolonged impasse could threaten the safety and security of our communities.

In homeland security and emergency management circles, talk of the unthinkable usually revolves around complex hazards that produce a cascade of failures resulting in ripples of consequences. This time around we are talking about a cascade of failures that will produce a complex hazard the likes of which we have no way of really knowing until they emerge. What is certain is that some effects will be immediate and others will take years to appreciate. Regardless what time scale their emergence or our awareness of them adheres to, one thing is certain: Most of the worst consequences will never go away.

Those who argue that the debt limit does not matter seem to believe in a myth of American exceptionalism that suggests we can do no wrong, that our decisions and actions will not produce the consequences for us that others have suffered, often at our hands. The opposite is more likely true. Our security could be threatened in previously unimagined ways by creditors who force us to swallow the bitter pills we have dispensed so earnestly and eagerly to others.

Nowhere is this more likely than in the developing world. China and India are rapidly approaching the points where their roles will shift from risk takers to risk makers. And those left vulnerable to the risks created by their rising dominance will surely be us.

China’s military and political might worries some. But its economic ambitions, borne as they are of a desire to keep pace with the burgeoning aspirations of the Chinese people, are greater cause for concern if only for the consequences of their pursuit on the climate and therefore our own ecology and environment.

Others who see little urgency in the current situation may fear the economic effects of others’ decisions and actions but gleefully imagine an America whose government can no longer afford to inhibit or interfere with the decisions and actions of her own citizens. These same people apparently see little difference between a natural person and a corporation when it comes to fundamental liberties. Sadly, the same cannot be said of these same individuals’ assessments of the responsibilities of each to the other.

It’s worth reiterating that U.S. government default is unprecedented. This is important for two reasons: First, the effects are not simply unknowable because we haven’t witnessed such an event before, but because we have no clear idea what ripple effects will result. Second, unlike other disasters that involve underlying processes that we do not fully understand and therefore cannot predict, we know with certainty that the effects of this disaster are entirely preventable.

We cannot and should not assume that the sovereign debt crises resulting from other countries’ fiscal and monetary failures presage the effects should Congress and the White House fail in their duties to resolve the current crisis. Our economy is not just the biggest, it is also intimately connected with every other economy on the planet. Several economists have warned that default would not only delay recovery from the recent recession, but could actually trigger a worldwide depression. We cannot assume an economic calamity of this sort would resemble previous economic depressions.

A devaluation of the U.S. dollar and higher interest rates resulting from default would hit pocketbooks and balance sheets immediately. Reluctance of foreign buyers to invest in U.S. treasury bills would require the government to suspend activities almost immediately to meet interest payments rather than risk further defaults. As government dollars began flowing out of the county to repay foreign creditors, job losses would rise almost as fast as the prices of basic goods and services.

Already stressed state and local governments would be hit hardest after a default. The effects of the recent recession emerged there last and have lingered far longer than elsewhere in the economy. The need for structural and systemic reforms rather than simple shifts in emphasis have already become apparent to many public safety executives as evidenced by the recent legislative initiatives to repeal collective bargaining rights and restructure public employee pension obligations.

As Chris Bellavita’s holiday post reminds us, our leaders have to work if they are to preserve our republic. Their deeds must match their words.

Phil Palin for his part reminded us that our forebears equated the ideals of the republic with the pursuit of eudaimonia. How one attains such an ideal was as troublesome to the ancients as it is for us today. Then as now, much of the disagreement centered on the importance of attaining wealth and exchanging external goods.

Agreeing on the virtue of reducing the debt is meaningless if we are not prepared to meet our obligations. Others can only ever truly judge our intentions by our actions. And even the mere suggestion that the unthinkable is now thinkable has had a negative effect on confidence in our government and its leaders.

Emerging from the current crisis, whether it deepens into downright default or not, will depend on how we respond not just to our situation but to one another. When cities and states can no longer afford to provide essential public safety services who will notice? And what will they do about it?

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