I saw a talk years ago by Lester Thurow at MIT about innovation, the global economy, and differences between Europe, Japan, and the US. Thurow's predictions have often been wrong, but one of his arguments about history makes complete sense.
Thurow argued that one thing America does right compared to Europe and Japan is that we allow people to clean the slate and start fresh with their lives. This allows us to bury dead companies and start new ones, ones that will create new jobs and help grow GDP.
Allowing individuals to declare bankruptcy may have allowed some miscreants to simply get away with their own poor planning. But it also allowed entrepreneurs to try and start a business with their own money, and if they failed it let them clear the books and start over. Japan has both cultural and legal differences that greatly restrain the same behavior. And as a result, there are what Thurow called "undead companies" that go around sucking the capital, and hence life, out of viable companies. These undead companies simply won't go away, and are causing a net harm to their economy.
By going along with the predatory credit card industry and passing the new, more restrictive bankruptcy law, Congress has put another heavy weight on the American economy. Along with overspending, reducing funding for basic research, and trying to shred the Constitution, they really are doing quite the job of ruining this country.
UPDATE: I just saw a more cogent article than mine, by Dadtalk, on the new bankruptcy laws.
Posted by Tom Nugent at April 15, 2005 09:02 AM