Felix Salmon: The default has already begun

In a piece entitled The Default Has Already Begun, Felix Salmon makes the following comments:

The best way to look at this, I think, is that there's a spectrum of default severities. At one end, you have the outright repudiation of sovereign debt, a la Ecuador in 2008; at the other end, you have the sequester, which involves telling a large number of government employees that the resources which were promised to them will not, in fact, arrive. Both of them involve the government going back on its promises, but some promises are far more binding, and far more important, than others.

Right now, with the shutdown, we've already reached the point at which the government is breaking very important promises indeed: we promised to pay hundreds of thousands of government employees a certain amount on certain dates, in return for their honest work. We have broken that promise. Indeed, by Treasury's own definition, it's reasonable to say that we have already defaulted: surely, by any sensible conception, the salaries of government employees constitute "legal obligations of the US."

I guess I should conclude from Salmon's comments that every time a company lays off some of its employees (and federal employees are experiencing not layoffs, but rather furloughs), then that company is "in default."

The bubble that government employees live in is truly amazing. Awww, the poor federal workers, waaaaah!!! Do they not understand the basic concept of layoffs? Out here in Silicon Valley where I work, layoffs are a fact of life: when your company's expenses are greater than its revenues, it may decide to lay people off. When I was working for Nielsen, I came in one Friday in the darkest days of 2008 and discovered that 2 out of every 3 people in my office had been laid off. My friend Sebastien, a highly qualified senior software engineer, was one of them. Sebastien didn't whine about "resources promised to him not arriving." Instead, he packed up and left. The next week he was out pounding the pavement looking for a new job. Within a couple of weeks, he had found a job that was better than the one he'd had at Nielsen. This is the flexibility, agility, and the resiliency of workers in the high tech sector. Compare this to the ossified, sclerotic, inflexible world of the government worker.

Last week I quoted Treasury Secretary Jack Lew's astonishing statement that "[the payment system of the US government] was not designed to be turned off selectively." Now, Felix Salmon makes the astounding claim that it is "a default" for the government even to furlough workers. The government cannot stop spending or furlough workers when it is spending more money than it is taking in?!? What world do these people live in?