Re-posted from December 31, 2011. I wanted to bring this back up because I am too lazy to write another post about what we face. Little has changed from this New Year’s Eve post except we now have a president who is unfettered and unconstrained by the prospect of re-election.
I’ve been giving thought to going into 2012. New Year’s Day is seen as a chance for renewal, an opportunity to expect new and better things, a day to resolve to change the negative things that we dislike about ourselves. Being that it is an election year, we also have just as much opportunity to improve and change the body politic as we do ourselves. Making that change is a process, it isn’t just vowing to go to the gym to lose that nagging 15 pounds, to achieve that goal and make it stick requires understanding the reasons for gaining the weight in the first place and actually doing something about it. Changing the political process is really no different.
The first step would be to lose the useless 180 pounds or so that currently occupies the Oval Office. Carrying that much extra weight is hazardous to our health.
How the heck did we gain that extra 15 pounds in the first place?
The fight that we fight today exemplified in the WWE cage match between the #Occupy[yournamehere]/99%ers vs. conservatives/classical liberals/the 1% is really the same debate that we have been having since the report from last shot of the American Revolution vanished from American ears. There has always been significant disagreement about the role of our federal government in the prosecution of governance…even at the beginning.
The ratification of the Constitution by the original colonies was no simple matter and as can be seen in the post-Revolutionary War debates, there were people diametrically opposed – some wanted to appoint George Washington to a kingship and have a monarchy, some wanted no central authority at all. The result was ratification in 1777 of the Articles of Confederation.
The Articles provided a confederation (a loose organization of states) that proved to be too weak for national governance to survive. The federal government had no power to lay and collect taxes and without the means to sustain itself, it was not able to borrow and repay loans and the money that was printed was worthless – giving rise to the saying “not worth a Continental” referring to the worthless script that was printed. There were members of the Continental Congress that understood that without a stronger bond, the United States would be united only in name and would eventually fracture into an aggregation of nation-states, all aligned according to the needs, wants and desires of their citizenry and America would be over before it started.
The call soon went out for a Constitutional Convention for the purpose of drafting and ratification of a more unifying national organization that would allow the nation to actually function, not as a loose aggregation of independent states, but as a unified nation – truly the United States of America. These men did recognize the need for a basis for greater control at a national level but they also knew that they must craft one that still accommodated the individualism of the smaller governmental units, i.e. the original 13 states. In light of this balancing act, the Constitution of the United States of America was born.
Still, ratification among the original 13 was not easy. There were the Federalists and the Anti- Federalists – there were also still factions that wanted to kiss and make up with England and return to the fold – to rejoin and be governed by the English monarchy. The Federalists were for more central authority and weaker state government and were led by James Madison; the Anti-Federalists were led by Patrick Henry. The major issue of the Anti-Federalists were:
- The Constitution gave too much power to the national government at the expense of the state governments.
- There was no bill of rights.
- The national government could maintain an army in peacetime.
- Congress wielded too much power due to the “necessary and proper clause”.
- The executive branch held too much power.
Perhaps the greatest arguments that the Anti-Federalists had were that 1) the new federal government would have too much power over the states and 2) that there was a lack of a bill of specifically enumerated rights. These two were powerful because they were precisely what the people of America had just fought a war over – the capricious exercise of total power by a governing entity without having a say in the matter and the fact that Colonialists never really knew what rights they had from day to day depending upon what the next decree from King George III would command.
The Federalists had answers to both; they argued that two major features of the new Constitution would protect the people and the states from an all-powerful central government, one indistinguishable in practice and effect from a monarchy. Those were the separation of powers and the idea of constraint of government rather than the enumeration of specific rights beyond the natural rights given specific voice by the written document.
The Federalists stated that the act of the separation of powers into three independent branches of government protected the rights of the people. With each branch representing a different aspect of the people, and all three branches being equal in stature, no single branch could assume control over another, in essence creating the idea of “checks and balances” to keep each in line with the Constitutional constraints. As the Senate and the House were to be made up of representatives of the states, and the House members being apportioned by the population of that particular state, the states still had a great deal of power to determine their own futures in a national scheme of government. They also argued that since all spending bills had to originate in the House of Representatives, the states actually controlled the national purse strings.
As to the issue with a bill of rights, the Federalists argued that a specific listing of rights can be a dangerous thing and the Federalists had a strong point, one that we are seeing the folly of today. They argued that if the national government were to protect specific listed rights, what would stop it from violating rights other than the listed ones? Since we can’t list all the rights, the Federalists argued that it’s better to list none at all.
Our folly is in that we have allowed the construction of a government that tries to legislate and answer almost everything, that the solution to all problems is just one more law or regulation. Even the Founders saw that a process like this simply invites corruption.
There is little doubt that the Founders contemplated the success of America or that the population of our country would grow to from approximately 3.8 million at the time the Constitution was ratified (the ninth state to approve was New Hampshire on June 21, 1788) to over 310 million today and that land mass would eclipse that of the original 13 colonies by almost tenfold (375,000 to 3.7 million square miles).
We still disagree today.
In chatting with friends and family over the holidays, I have noticed that many think that this is too complicated to unwind or just too complex of an issue to take on…and I do have the full spectrum of beliefs running from Obama supporters to the “top off the stock of canned goods, MREs and 9mm ammo in the basement” crowd.
There are some who are disappointed that Obama has failed to implement all of the collectivist polices that he implied he stood for, turning the US into a version of the United Federation of Planets of the fictional Star Trek universe where food is synthesized out of thin air, there is no need for money and everybody works for the greater glory of the Federation. They are disappointed that he has adopted many policy positions of the prior administration.
There are some who see the Obama presidency as the end of life as we know it and damn him for exactly the same actions that his supporters do – except for very different reasons.
The truth about Obama lies somewhere in between…while I personally condemn his policies and his attempts to “remake” America into FDR on steroids; I thank my lucky stars for his inexperience, his arrogance and his incompetence that prevented he and the Democrats from getting it done.
So what happens now? If, as pointed out, this has been going on for over 200 years and we are an infinitely bigger and more complicated nation now, how does this get washed out? I think that we have to start to decouple all the spin and window dressing of the issues and get down to the brass tacks. The Federalists were right about one major thing – any attempt to enumerate all behaviours will result in inevitably restricting all behaviours.
To get at this we have to strip it all naked.
Reducing to the least common denominator.
Curiously, yet somehow predictably, all of our national political and societal debate boils down to the same root issues as faced by the Constitutional Convention of 1787. The whole debate can be summarized in the answers to these three questions:
- What do we want our government to do?
- How much will it cost?
- How do we pay for it and who pays?
These three questions are the queries that must be answered for the general public before a revolution of classical liberalism can occur.
What do we want our government to do?
This is perhaps the most complicated question with the easiest answer – but that answer is of supreme importance because upon that answer is built the entire basis for all political argument and agreement – every single one. From “progressive” to liberal to conservative to classical liberal, every single debate point has its root in 1) identifying a particular problem or need and 2) taking positions whether government has a role and 3) deciding what that role is.
The macro answer to the question is this: since the American system of government is a construct of the people, it can do anything the people allow it to do.
Notice that we use the word “allow” and not “decide”. The reason that I did was that in a representative form of government as we have in our American Republic, the organization of government is designed to make decisions for us though the choice of our elected representatives.
It has to be that way, direct democracy would be impossible in a country of 310 million people. Voting on every issue, every bill and every treaty or international agreement would be a logistical impossibility and since no one can anticipate every issue, we choose representatives to do it for us. These representatives are elected based on their proposed policies and ideological positions that the time of the election with the expectation that they will behave (and vote) in a manner consistent with how they have presented themselves to their electorate. No matter how much we want and expect it not to, this creates a layer of disconnected management between government and the people when a country and its government grow larger. The problem with this management gap is that like SkyNet of the Terminator movies, the government then becomes self aware as an artificial entity.
This is one aspect of the brilliance of the Founders is that they designed our government to be infinitely scalable – to be able to change and our representation grow – to meet the challenge of national expansion. As mentioned, it is unlikely that they could foresee the eventual magnitude of our expansion but they did foresee our greatness and they knew that pursued that with things like the Louisiana Purchase Treaty of 1803, the belief in the concept of Manifest Destiny in the 1840’s followed by Seward’s Folly (the acquisition of Alaska from Russia) in 1867.
So a federal government is necessary and it can do “big things” but the question remains – what do we want the government to do?
In a quote oft credited to Thomas Jefferson (but most likely written by Henry David Thoreau) it is said:
“That government is best which governs least.”
That is why, even in calling for a stronger federal government, the Federalists also constrained it to a very limited scope of explicit and enumerated powers…
- The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
- To borrow money on the credit of the United States;
- To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
- To establish a uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
- To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
- To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
- To establish Post Offices and Post Roads;
- To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
- To constitute Tribunals inferior to the supreme Court;
- To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;
- To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
- To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
- To provide and maintain a Navy;
- To make Rules for the Government and Regulation of the land and naval Forces;
- To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
- To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
- To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And
- To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
…and added the 10th Amendment (ratified in 1791), specifically stating that:
- The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
As previously mentioned, the Federalists argued that a specific listing of rights can be a dangerous thing and they have been proven prescient, the strength of their wisdom is exemplified in the governmental mess that we have today. They did argue that if the national government were to protect specific listed rights, what would stop it from violating rights other than the listed ones? Founded in reason, the Federalists argued that since we can’t list every single right, it is better to list none at all.
This is perhaps the greatest lost wisdom of modern times and remains the best argument against the expansion of government.
Why the expansion? This expansion has come about as different factions have actively moved, over time, to answer the “what do we want government to do” question.
I don’t see that we are ever going to be able to unwind the mess that we have on an incremental basis. There are just too many laws, regulations and statutes that have been enacted at a federal level; the Federal Register – the catalogue of federal laws – is now over 80,000 pages long. Add to that the tax code, the millions of pages of other bureaucratic agency regulations that have the force of law and the companion laws at state level enacted to support federal legislation and there is a totality of control that is incomprehensible to understand and even more disturbing, impossible to repeal.
Too many “smart” people trying to achieve goals of dubious “constitutionality” have “interpreted” the simple language of the actual Constitution to allow them to get away with actions that are arguably both good and bad. The question isn’t really one of the values of the efforts but whether they should have been allowed by the proper interpretation of the Constitution in the first place.
Rather than using the proper provisions designed by the Constitution for change, they have used the judicial branch to contort the meaning of the document to allow it to “grow” to fit modern “sensibilities” – something that really means “whatever I want it to mean, whenever I want it”. Exactly what the Anti-Federalists feared – that Congress would wield too much power due to the “necessary and proper clause” – was almost correct, they should have feared that the judicial branch would become an enabler through politically motivated judicial activism.
Have we strayed too far? I think the answer is an unequivocal “yes” and the endless discord with respect to governance is a symptom of that. The only answer seems to be a total reset at the federal level – perhaps even a Second Constitutional Convention, not to look at changing the words of the original document but to assess the path to correcting by elimination the legislative and judicial activism that has effectively rendered our country a socialist state (in all but name), made half of our citizens dependent on government programs and made each one of us felons. This causes me to again recall something from the Obama Instruction Manual of Governance (Rand’s Atlas Shrugged), an exchange between Hank Rearden and Dr. Floyd Ferris, Ph.D., the Associate Director of the State Science Institute:
“Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against—then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it.
You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted—and you create a nation of law-breakers—and then you cash in on guilt. Now that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.”
When a principle can mean anything or everything, it really means nothing and ceases to be a principle. It would seem that is where we are and the very reason that we need a reboot.
How much does it cost and why even discuss it in monetary terms?
Pundits, columnists and authors from all reaches of the political spectrum love to trot out concepts like freedom, life, liberty, the pursuit of happiness. It has been so since the beginning of the French Revolution and the birth of the American Republic. While it may be looked upon as unseemly to talk about money in the context of these ideals, the truth of the matter is that, as in business, money is the language of government.
Money is fungible, which is that it is freely exchangeable or replaceable, in whole or in part, for another of like nature or kind. This is the greatest invention of modern financial systems in that it creates an infinite amount of efficiency in conducting transactions by providing a medium of known value that is universally accepted for exchange in all commercial systems. Money is used not only as a vehicle of income and taxes but as a measure of wealth. Land, buildings and personal property bear an “assessed” valuation expressed in monetary units as a measure of their worth to the marketplace.
Money (a recognized and stable currency) makes for a stable and efficient means to conduct transactions – that speeds the ability to create commerce, the engine that drives an economy. Can you imagine going to a market to buy a blender or a can opener and the price tag says “one large sized goat”? What if you didn’t happen to bring your herd of goats with you that day (no impulse buying!) and have to go home to get the goat and when you come back, it has gone on sale for “one medium sized goat”? How do you even make change?
Another reason that money is of significance is that we have achieved another similarity with the times of the Founders, one that initiated the replacement of the Articles of Confederation with our current Constitution – now as then, the national government can’t pay its bills and our currency is in the process of losing its value. The irony today is that this isn’t happening because the government can’t borrow money but precisely because it CAN – and has done so prolifically and out of balance with GDP in the quest to support a “progressive” definition of what government should do.
This is why money (currency) is important in an economy and why everything – social services, infrastructure (bridges, roads and streets), debt, police and fire protection, garbage pick-up, everything – can be reduced to this common denominator. Determining cost is a must because cost is how policies are expressed to the people in terms of what we do and are willing to spend on them and the necessity for taxes to fund them, thereby making 1) a federal budget an absolute necessity and 2) balancing that budget an activity requiring an absolute constitutional mandate. Spending must be brought under control. Period.
The inability to get control of this budgetary process, the desire of the government to ignore it (three years in and Obama and the Democrats still have not proposed a budget) and the desire of the administration to simply raise taxes in a period of economic downturn so that taxpayers will sacrifice while the government doesn’t gave rise to the much maligned Tea Party movement. You will hear politicians say that we must “share the sacrifice” but raising income taxes on the half of taxpayers that do pay taxes is hardly “sharing”, bringing us to the final question…
How do we pay for it and who pays?
What is clear is that the current “progressive” taxation system that we have today isn’t working. Truman North at AOSHQ notes that even while we have an income tax system where the top 25% pay 87.3% of the taxes, the “progressives” want an even steeper system:
In Politico, progressive activist Robert Borosage makes the case for a more progressive federal income tax and higher taxes generally by showing what those taxes would presumably buy. Specifically, he speaks of the core Democratic constituencies which would be subsidized by the president’s ~$450B American Jobs Act stimulus plan: teachers, construction workers, the working poor in general, unionized federal government employees, the long-term unemployed, and so forth. To Borosage, the alternative to subsidizing government through these expenditures is the extinction of the middle class.
His arguments are based on Keynesianism without embracing Keynes’ prescription for lowering taxes in lean years; they are rather half-baked. This is a common conceit among the tax-and-spend set on both sides of the aisle. His disdainful presumption that no private concern could possibly fund anything that government does now is clear. He conflates cause with effect, blaming lack of spending on the high poverty rate. He accuses Republicans of cutting popular social programs while praising the president for suggesting that we could save money by… cutting those same programs. His sins are of both the commission and omission variety. Although it is a shoddy piece, even by the standards of Politico and even by the standards of pop culture, it is nonetheless representative of the American left as embodied by the Democratic Party (However, it is not only the Democratic Party who believes that the alleviation of inequality is a legitimate goal of government. Indeed, it is pervasive conventional wisdom.)
But North also points out that in analysis at National Review Online, Veronique de Rugy shows in graphical form evidence that our current federal tax regime is already highly progressive.
De Rugy, an economist and an adjunct scholar at the Cato Institute, also gives reasons as to why this is the case: social engineering and wealth redistribution through the tax code means that almost half of tax filers pay no federal income tax. She argues against the steepness of the current regime and the imposition of new income and capital gains taxes. Her thesis is that job creation requires that those with capital take risks and therefore employ people.
Even Marxists recognize that labor demand is a by-product of the MCM’ cycle of capital and that less capital means fewer jobs.
I, like de Rugy, agree with the President of the American Enterprise Institute, Arthur Brooks:
But when a government that has overspent for years turns to tax increases instead of spending cuts simply for the sake of “fairness”, it weakens free enterprise, lowers opportunity and impoverishes us in many ways.
And that is simply unfair.
Continuation of the status quo is not acceptable. When roughly 35 million taxpayers bear the federal tax and debt burden for 310 million citizens, there is no “fairness”. While I personally agree that those who earn more should pay more (in real terms, not in percentages – i.e. on a flat 10% rate, a person making $1,000,000 a year pays $100,000, a person making $10,000 pays $1,000) anything else is a “progressive” attempt at income “equality” and constitutes a confiscatory action to redistribute income and not to pay for the cost of government.
There is also no “fairness” in a system where people can vote while bearing little or no burden or the consequences of the result of that vote. Alexander Fraser Tytler is credited as saying:
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.
We have all the appearance of following Tytler’s prescribed path.
In my estimation, a flat tax is the only way to go with only exemptions for food, clothing and an allowance for shelter to protect those who are truly poor. Forget the gradations for capital gains, income is income and everybody pays something. If the person has no independent income and is receiving government benefits, some form of public service would be required even if it is picking up trash from the highway right-of-way.
Sounds harsh maybe, but an end must come to the process of the political class of guaranteeing itself a constituency through the absolution of their responsibility for their choices and thereby making their votes count more than those of the taxpayer (who is outnumbered).
I’ve said it before but I will say it again, I honestly believe that true reform is rooted in the following:
- Legal respect for the Tenth Amendment:
- “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
- Repeal of the Seventeenth Amendment and reverting to Article I, Section 3:
- Curretn: “The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.
- Article I, Section 3: The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof, for six Years; and each Senator shall have one Vote.
- Repeal of the Current Tax Payment Act of 1943
- This Act mandated automatic withholding of federal income tax, effectively making private employers the agents of the IRS.
These three actions, perhaps more than any others, would return the power of government to the people through decentralization of government, ending the hegemony of lobbyists in D.C., devolving the centralized socialist planning philosophy of Washington, making elections on a state level relevant to national government (it would matter who controls state legislatures due to the appointment of Senators by those respective bodies) and returning the power of the purse to the people. I maintain that having to plan for and pay taxes directly out of your bank account creates a greater degree of sensitivity for how much money government spends and why.
I’ll also state again that it is my firm belief that this revolution must start at the local and state level for it to be successful. If we really want to return the country to a true representative republic based on constitutional principles, it begins with us.
In my last post of 2011, I wish the happiest of New Years to all and I hope that 2012 is truly a year of change.