In “What is Seen and What is Not Seen”, Bastiat championed the need to look beyond the immediate effect in order to foresee long term effects of policy decisions. Todd Zywicki this week lays out some of the foreseeable consequences of the Obama administration’s destruction of bankruptcy law.
By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation. In other words, Mr. Obama may have helped save the jobs of thousands of union workers whose dues, in part, engineered his election. But what about the untold number of job losses in the future caused by trampling the sanctity of contracts today?