We live in interesting times. Today’s example is this column from conservative/libertarian tax-and-fiscal-policy wonk Josh Barros about the collapse of Curt Schilling’s 38 Studios and its impact on the state of Rhode Island.
As the headline indicates, Barro’s main point is that Rhode Island should default on the economic development bonds it sold to finance its $75 million investment in the failed video game company—and then get out of the venture capital business entirely. But what’s more interesting (to me at least) is the argument Barros makes to reach that conclusion:
“…Rhode Island’s government has more moral obligations than it can possibly service. The state still struggles under a huge unfunded public employee pension obligation, even after a major set of pension reforms last year, which will freeze cost of living adjustments for current retirees for as long as 15 years.
Surely, the state had a moral obligation to pay those pension benefits in full. If it couldn’t afford to meet that obligation, how can it afford to appropriate the nearly $100 million that it will take to pay off the 38 Studios bondholders with interest?” (emphasis added)
Barros doesn’t use these words, but this is (I think) an argument—and a moral argument at that—for the priority of labor over capital. Rhode Island faces two “moral obligations”—one to its bondholders, one to its retired workers—competing for its limited resources. Barros finds himself aligned with such unlikely ideological allies as Karl Marx and Pope John Paul II in arguing that the capitalists should be first to take a loss, and (implicitly) that promises made to workers should be broken only as a last resort.
If, as many on the right assert today, the US government faces a crisis because it’s made “too many promises to too many people”, Barros provides a simply, handy rule of thumb for one way to resolve the problem: if financial promises must be broken, first break the promises made to the holders of capital.
Crossposted at: http://masscommons.wordpress.com/
