Personal bankruptcies are being filed at a rate 25 percent higher than in 1995, and if the current rate is maintained, the absolute numbers, estimated at 1.1 million, will surpass the record of 900,000 set in 1992. The situation surprised the New York Times (August 26, 1996) because normally high bankruptcy rates occur during recessions. We are in the fifth year of economic recovery, however, according to the experts. The problem, therefore, must be due to greed and personal irresponsibility. Banks are offering credit cards to people who would not have qualified in the past and, anyhow, the American people no longer feel that bankruptcy is a disgrace. Tom, a practical nurse from Cambridge Springs, Pennsylvania, said of his Chapter 7 bankruptcy, “I don’t look at it as a cop-out. I’m just taking advantage of one of the opportunities the Government offers.” He relieved his guilty conscience by referring to the bankruptcy declared by Rockefeller Center. We Americans are so irresponsible. It is hard to see why the Times puts up with us. (It was a Japanese consortium that owned Rockefeller Center, but let that pass.)

Other explanations lie near to hand. For one thing, we no longer measure prosperity by the Cross National Product, but by the new Gross Domestic Product, which, inter alia, counts as American prosperity profits made in the United States by foreign firms, for example on television sets or VCRs.

A study issued by Visa International seems to show a striking difference from earlier periods. In 1991 nearly half the bankruptcies were attributed to “job problems.” Now 15 percent are attributed to “unemployment” while 29 percent are filers who are “overextended.” Irresponsible Americans again! Lawyer Alan A. Aaron of Midland, Texas, describes the vast majority of recent personal bankruptcies as “a husband and wife working where everything seems to be going the right way, except they have more money going out than coming in.” Mr. Micawber, call your office! Other observers have a different view. “Downsizing is the current theme here,” says Jonathan Kohn of Newark. Ms. Jeannie Seeliger of Jersey City told the Times, “We have people who have lost jobs in banking, on Wall Street, you name it, every field I can think of, and it has a ripple effect.”

The role of downsizing in the current bankruptcy crisis is disguised by the flexibility of the United States economy. A recent government study, reported in the Times on August 23, discovered 8.4 million people pushed out of their jobs involuntarily from 1993-1995. Most of them found new jobs, but only a third were paid their old salary or better. You and your wife are both working, a situation historically true of economically precarious times. One of you is downsized and has to take a job at a considerable cut in pay. There is no comparable cut in your continuing expenses, which may include a mortgage, and the cost of college or private school. For many families the choice is between a life reduced to the level of the Victorian shabby-genteel, or borrowing. Consumer debt is growing at the rate of nine percent, with a current total of $1.2 trillion, $350 billion of which is on credit cards. Visa International estimates that one out of every 100 households will declare bankruptcy this year, with a debt averaging 5.3 times its annual income, as opposed to 3.5 in 1988.

Government figures show unemployment at 5.1 percent, a seven-year low. According to the papers, this good news caused Wall Street to rebound from a serious drop on the day before the news was announced (September 6). Louis Rukeyser of PBS had a different version. The news of low unemployment was leaked on Thursday, September 5, and Wall Street, in fear of Alan Greenspan’s raising interest rates, sank some 50 points. When the full report was released the next day, careful readers could see that about a third of the new jobs were in government and so no sign of a healthy economy. (Much the same is true of the 10 million jobs the President keeps telling us he has created. His policies did have a role in creating many of them, but they are paid for with taxes, not vice versa) As a nation and as individuals, we owe far more than we can repay.

Is there a way out of this mess? Yes, but first we must face the fact that downsizing, the loss of good jobs overseas, is the result of our headlong plunge into the whirlpool of the global economy. Our first mission is to protect American jobs by protecting American farms and businesses. Economic historians Alfred E. Eckes, Jr., in Opening Americas Market (1995), and Paul Bairoch in Economics and World History: Myths and Paradoxes (1993), have shown that America’s rise to world economic hegemony and the spread within America of general prosperity occurred at times of high tariffs. Republican Presidents from Abraham Lincoln to Ronald Reagan have supported protectionism, while Democrats from Woodrow Wilson to Bill Clinton have opposed it. On this issue, as on most important ones, there is no substantial difference between Clinton and Dole. Under either man the United States faces a future of increased downsizing and consequent debt. Even a slight economic downturn will send our country spinning off into the nightmare of bankruptcy and unemployment that Mexico has been going through for the past two years. After that the inevitable scapegoating will begin, to be followed in short order by ethnic conflicts, exacerbated by religious and economic differences, that will make today’s Bosnia seem in retrospect a happy dream.