With the US government inching ever closer to default, it is time to once again to revisit the Debt Ceiling
. Though faulty in design, the Debt Ceiling was created to do just that, limit debt. It is often likened to the classical Greek story of Ulysses at the Mast
, where he has his sailors tie him to his ship so he won’t be tempted to dive off his boat and swim to the Island of the Sirens, an almost irresistible but deadly temptation. By acting now, tying himself to the mast, he can’t act otherwise in the future, swim away. Aside from the bondage, you are likely familiar with this.
The Debt Ceiling is akin to how we often limit our own spending. Every time you leave credit cards at home and bring cash alone when going out with friends, you have created your own “debt ceiling.” After spending your last dollar and your wallet is openmouthed and empty, you can’t spend anymore. Not until you get home at least, where you can choose to repeal your previous personally legislated financial limits. Being now far from the bar, however, it’s more likely that you end up going to bed, making your self-imposed restrictions works. There are many varieties -- Christmas Clubs, Piggybanks, freezing your credit card in a block of ice – and all usually effective. Unfortunately, they should come with a warning.
This is what I wrote in The Procrastination Equation:
“Like all precommitment methods, these devices aren’t foolproof. To begin with, they are inflexible, so you can’t change your mind even for legitimate reasons. Where would Ulysses be if his ship started sinking or was attacked by pirates with him still bound to the mast?”
And Michael Ignatief, former politician and intellectual powerhouse, wrote similarly when discussing the Weimar legal theorist Carl Schmitt.
“Rights that stand in the way of a regime’s survival should be suspended in a time of crisis. The Ulysses metaphor would have made no sense to Schmitt. No regime can afford to tie its hands to the mast and stop its ears with beeswax if the ship of state is being boarded by pirates. Ulysess must untie himself, rally the crew, and fight back.”
The crux of the matter is that sometimes you have to act otherwise, you have to break your precommitment. Since you yourself have decided you can’t be trusted with it, many forms of precommitment have you give the decision to someone else. A good example of this is the precommitment shop www.stickk.com. There you will find nifty and binding contracts that you can sign to make you quit smoking, lose weight or run more. Just notice step three of their process: Choose a Referee.
Your referee enforces you to the contract and determines whether there should be exceptions. A good referee will give the right amount of flexibility, a wise Solomon so to speak. Firm when needed but understanding in need. A poor one will likely being inflexible, demanding the letter of the law be carried out. A bad one won’t bother enforcing it all, making it a farce. And a really bad referee, that’s where things become interesting. They can change precommitment from self-blackmail into just plain old blackmail.
We were all so worried about Ulysses and the pirates that we forgot about Ulysses and the sailors. What happens after the danger of the Sirens has past? Do the sailors untie him as expected or now start their own process of negotiations? Ulysses gave up his control to them, depending upon his crew to release him as needed. Instead, they might point out that they were never specified exactly when their captain was to be untied and unless they get double pay, that might not be for a long time.
This is happening with the US debt ceiling. The GOP in the US is using the debt ceiling not as a way to limit debt but as a tool to repeal the Affordable Care Act, better known as Obamacare. Their concern isn’t whether the debt will grow or shrink, nor is it other ways of reducing expenditures; it’s “Do what we want or we will let this nation slide into insolvency.” Whether you think socialized medicine is good or bad doesn’t take away the cautionary note. This tactic can be used by any referee who controls Congress, leftwing or rightwing, for any purpose. When you give up control, be very careful who you give it up to. Your agenda can be co-opted to become theirs.
Because of a rather major flaw in the way the Debt Ceiling was constructed, this opportunity for blackmail will and has happened with regularity. The Debt Ceiling is based on an absolute financial figure, a definite dollar amount. This was a bad choice. As a country and its economy grow, the amount you should be able to reasonably borrow should increase. When I was ten years old and depending upon my paper route for funds, lending me $10,000 would have been unwise. Today, I earn quite a bit more than when I was hefting newspapers around and feel presently banks can indeed lend me enough to cover my mortgage. Similarly, the Debt Ceiling really should be expressed in terms of percentage of GDP, allowing it to grow with the economy, but it isn’t. This means that with some frequency, hundreds of times since the 1940s when it was first instituted, the Debt Ceiling will need to be legitimately increased.
For the US, the Debt Ceiling muddles reasonable reasons to increase the borrowing limit with reckless ones. For us, the same thing can happened and what originally started out as self-blackmail, to get us to run more or eat less, can become just blackmail. When you may have legitimate reason to override your precommitment and skip a run or add a meal, such as to rest up for a major marathon and load up on carbs the night before, your request might be inflexibly denied by your arbitrator. “The law is the law” is all you hear. But it could be worse. They might be willing to accommodate, but only if you do something for them first. Perhaps they want you to start chauffeuring them around the city or provide a series of deep tissue massages. The only limit to their demands is that it can’t be worse than the penalty you pay for defaulting on your precommitment. The greater your need to break the precommitment and the bigger the penalty for doing so, the more power the referee has over you. The only choice you have now is the suffering of following through on your precommitment or the cost of fulfilling the desires of your referee. If you have managed to acquire a truly awful referee with demands you just aren’t willing to satisfy, your precommitment will work, making you follow through, even when it really shouldn’t.
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