Simon Johnson doesn't understand why the business community is so passive about the threat the Republican temper tantrum over Obamacare poses to the long-run health of the US economy:
The Loss of U.S. Pre-eminence, by Simon Johnson, Commentary, NY Times: The United States became a superpower in the 1940s and, 70 years later, stands on the brink of losing that status. It rose to global pre-eminence at short notice, and its decline can occur just as abruptly. This week’s partial government shutdown both reminds us that the United States has reached such a precarious position and shows us exactly how things can now unravel as it approaches the really big confrontation over the debt ceiling. ...
I’m ... pessimistic. The United States won its global predominance in a short period, but based on a long haul of industrial development, productivity gain and fiscal prudence. Now the groundwork has been laid for its decline with political polarization, a longstanding tax revolt and a well-orchestrated campaign to undermine the legitimacy of the federal government. ...
The silence of much of the business and financial elite on the debt ceiling — as well as on the sequester and the government shutdown — is somewhat shocking. This is a group that is usually quite vocal in promoting its self-interest. ...
The Constitution was designed with multiple safeguards to protect the voices of relatively small groups. This is entirely appropriate. But consequently, if a well-financed and highly motivated group of members of Congress decides that the United States should default on its debts, then the United States will default.
If the business elite cannot speak truth to the Republican Party — and persuade its leadership and enough members of Congress to return to a more moderate stand — there is not much hope for the United States in today’s global economy.
Paul Krugman tried to explain this yesterday:
...business types ... suffer...from a triple misconception about our situation.
First, CEOs still talk as if debt and deficits were the central issue of economic policy. They never deserved that place; they certainly don’t deserve it now that the deficit has clearly been falling too fast and the debt outlook is stable for the next decade. Yet they can’t let go of the notion that a grand bargain on the budget — as opposed to an end to destructive austerity — is what we need.
Second, many CEOs are, I believe, genuinely naive about the people they deal with. They believe, for example, that Paul Ryan actually cares about deficits. They haven’t grasped, or refuse to grasp, the reality that the whole thing about deficits was really about using economic crisis as an excuse to tear down the social safety net.
Finally, they’re still trying to position themselves as the middle ground between extremists on both sides, when the reality is that we have a basically moderate Democratic party confronting a radical Republican party that doesn’t play by any of the normal rules. If you insist on thinking of Ted Cruz and Elizabeth Warren as somehow symmetrical figures, you’re already so out of touch with political reality that there’s no way you’re going to have useful influence.
I do sometimes wonder how these guys can be that naive, and some of them probably aren’t — they’re playing class warfare on the sly. But some of them really do seem clueless, probably because thinking about the reality of American politics today would make them uncomfortable — and who’s going to tell the guy in the big office things that make him uncomfortable?
It’s not just Fox News watchers who live in a bubble; sometimes, wealth and power can have the same effect.