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Ethics of the Greek Debt Crisis

Debate Blustering

By Jonathan B. Wight

The Republican debate last night was illuminating. Here are some musings about the economics and politics.

 1. Donald Trump is a blowhard and a buffoon, Trumpbut Chris Wallace, the interviewer who repetitively harassed him about his four business bankruptcies, deserves ridicule for asking a truly inane question. Trump did not handle it well, repeating over and over that in bankruptcy he was simply availing himself of the legal options of a businessman in trouble.  His answer missed the point. Here is how Trump should have answered:

TRUMP: “A market system supports innovation through risk taking. Entrepreneurs discover through trial and error how to push the boundaries of what is possible. This endeavor entails a lot of failure, and it is a testament to the spirit of entrepreneurs that they pick themselves up and go at it again and again. In my career I have been involved with hundreds of successful business deals. Out of these, four have gone south. This is a remarkable run of success. If you took a test with 100 questions and got 96 correct, most people would say that is excellent work. To focus your question on my failures alone – as if failure is an anomaly – displays a remarkable ignorance about the workings of a vigorous market system. It intimates that central planning is somehow superior because

there are no unexpected surprises and no innovations.  Failure is a good and necessary part of discovery and innovation, when no one has the information ahead of time to know what will work. 

“Furthermore, the intimation that the people who loaned me money on these deals are somehow being treated unfairly shows complete naiveté about financial markets. When borrowers lend, the rate of interest includes a risk premium that accounts for the probability that the endeavor will not make it.  People and countries with more failures obviously pay a higher rate to borrow.  And my creditors are eagerly willing to lend me more money on my projects at very low rates of interest. So, contrary to what you’ve suggested, my creditors are happy doing repeat business with me.”

 2. In terms of foreign policy, most of the candidates seemed desperate to play the jingoistic/xenophobic card, without any conception of the complexity of the world. Ted Cruz Cruzwas particularly dangerous, earning an F on my scorecard.  Here is how Cruz should have responded to the question about foreign policy:

CRUZ: “Most of my fellow candidates tonight are dangerously myopic about the world. The idea that America can bomb its way to peace is absurd. The idea that America can go it alone to be the world's policeman is equally simplistic.  Such thinking is how George Bush II blustered and blundered his way into the disastrous second war with Iraq. Which brings me to the proposed treaty with Iran. Nothing in politics is perfect, and this proposed treaty with our enemy is likewise full of warts.  But sometimes a leader has to hold his nose and do what will help move us forward.

“When Nixon and Kissinger negotiated with communist China back in the early 1970s, it helped nudge that country towards markets and engagement.  Does anybody think that a nuclear China should be isolated from the world? Why should we think any different about Iran?  The administration’s recent opening up to Cuba is exactly the right course of action, because it exposes people there to ideas of freedom. A treaty with Iran will hopefully strengthen moderates in that country by allowing the economy to grow. As J.S. Mill noted so long ago, the trade benefits from rising income are often swamped by the beneficial enhancement of morals.”

3. The most interesting and honest debate last night was between Governor Chris Christie and Senator Rand Paul, Paul Christieover the issue of federal eavesdropping on our phone calls and emails. Christie was a prosecutor in the aftermath of 9/11 and takes a hard stance toward using the levers of power to prevent another attack. Paul is a libertarian who passionately defends the Bill of Rights and limits on government’s intrusions. Their heated exchange deserves to be watched. 

The difficult call today is whether our undeclared war against terrorists is a grave enough threat to justify acting as if we truly are at war, when temporarily suspending some civil rights is what virtually every president has done for expediency. That is a huge camel’s nose under the tent of excessive government power, and Paul’s point that a search warrant is a reasonable expectation seems to win the day—at least until the next terrorist attack, when all rules and sensibility will be thrown to the wind.

4. Of all the candidates last night, Kasich one shined as a person of reason, honesty, common sense, and compassion: John Kasich, governor of Ohio.  He previously served in the House of Representatives and negotiating a federal budget surplus with a Democratic president. For all of these reasons—his reasoning, honesty, integrity, common sense, and willingness to compromise to reach desired goals—I give him zero chance of being the Republican nominee.

5. On the Democratic side, last week’s Economist playfully predicted that Senator Tim Kaine Kaineof Virginia would be chosen as Hilary’s running mate. I’ve known Tim Kaine for several decades, and he is also a person of reason, honesty, common sense, and compassion. He served in the Peace Corps in Central America and speaks Spanish fluently. In terms of foreign policy he is sane and sensible. Again, these are not attributes that tend to elevate someone in terms of national politics. 


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Excellent points, all around, Jonathan. I do think you're cutting Trump too much slack. Sure, lots of business deals fail, but 'four' is the count of the number of his companies that have gone bankrupt, not simply the count of 'bad deals.' No one gets 100 chances to go bankrupt; the better academic analogy is whether you can think of anyone who has been thrown out of four different schools.

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