We want an economy as strong and resilient as a superstar athlete. For that to happen, more people have to be like Gil Meche, the Kansas City Royals pitcher who refused his 2011 salary of $12 million.
Meche wanted to keep pitching. His shoulder wouldn't cooperate. He knew he'd spend the season on the bench or playing a limited role, not earning his salary as a starter. Meche said that he retired because he "didn't want to be the guy making $12 million doing absolutely nothing to help the team."
What this shows, first of all, is that Meche lives in an economy where contracts matter. Everyone expected the Royals to pay the 32-year-old what they owed him even after he failed to deliver the performance Royals fans hoped for.
More important, Meche's move was voluntary. He took into account what would happen to the other party and chose to forgo his $12 million.
In other words, a Meche economy is one in which the parties treat one another well enough that they want to do business again.
This sounds obvious, but it's not the predominant attitude in American business today. U.S. bankers never expected 2008 to be as bad as it was, or that taxpayers would bail out their companies. Sure, they're legally entitled to receive money due them. Yet when bankers go to court to collect their bonus money, as some have, they're telling taxpayers: "We don't care about you."
This self-righteousness undermines respect for the banking industry. It makes it harder for banks to get the rules they want as the industry is being reshaped. That, in turn, will affect the scale of bonuses next year.
Such gotcha opportunism is also evident among homeowners. A recent survey asked respondents whether they condoned strategic default, in which homeowners walk away from their home and their mortgage contract when the mortgage exceeds the value of the property. Almost half of those polled said they would be more likely to default if their bank was accused of predatory lending.
That might feel good — for a moment. But too many revenge defaults will drive up mortgage rates or make banks or mortgage companies more wary of lending to homebuyers.
I and other writers have detailed how irresponsible government actions slow economic recoveries. Similar behavior by individuals impedes growth, too. If you can't find someone reliable to do a deal with, you simply don't do the deal at all.
There was a time when most Americans knew this, as I've discovered while reading about Calvin Coolidge. After leaving the White House, Coolidge did what all presidents do: He negotiated lucrative writing contracts. One of these was a deal with Collier's magazine to write 10 articles for $2,000 apiece.
Coolidge delivered all 10, but the magazine published only six. The magazine's publisher must have felt a bit anxious when one day he got word that Coolidge wanted to see him.
During their meeting, Coolidge pointed out that Collier's ran only six of his articles. Yes, countered the publisher defensively, but the magazine had paid him the entire $20,000. If the articles weren't published, they must not have been good, Coolidge said. He then handed the publisher a check for $8,000.
The global marketplace fancies itself anonymous. But every behavior by every individual is built into every price or every deal. If this economy treats today's contracts honorably, it can pitch not just one but several strong seasons.