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Posts Tagged ‘Founding Fathers’

Like many libertarians, I’ve always assumed that Thomas Jefferson was one of the best Founding Fathers.

He certainly was an advocate of liberty and I’ve cited him several times (see here, here, here, here, here, and here) over the years.

But maybe being quotable is not enough.

There’s a fascinating article in the latest issue of Cayman Financial Review that looks at the emergence of economic liberty in the Anglo-Saxon world and it makes a persuasive argument that Alexander Hamilton was a more effective advocate of free markets.

Written by a Washington-area economist who uses a nom de plume because of his position in government, the article starts by explaining that England’s Whig Revolution in the early 1700s helped create the conditions for astounding British prosperity. Notwithstanding resistance from the landed elites.

In England, the Whig Revolution was a series of events – the successful invasion of William  of Orange to dethrone James II in 1688, the selection of George I to succeed Queen Anne in 1714, and the selection of Robert Walpole as the first Prime Minister in 1721 – that created the Westminster parliamentary system… Most important, the Whig Revolution also created the institutional and legal framework that transformed England into a modern capitalist economy and sparked the Industrial Revolution. The adoption of Dutch commercial law, the creation of the Bank of England, and the circulation of its bank notes monetized the English economy. English courts abandoned the medieval “just price” doctrine, which let judges nullify contracts after the fact based on the concept that all goods and services had an objective value and any deviation from this just price should therefore be unlawful. …Traditional guilds collapsed. Entrepreneurs were free to create new firms, determine output and prices, borrow from banks, and issue stock. New manufacturing firms lured workers away from the estates of the landed gentry to rapidly growing English cities with wages paid in paper currency. …Rapid economic, political, and social change inevitably produced a reaction led by the arch-Tory Henry St. John, the First Viscount Bolingbroke. …To Bolingbroke, the Whig Revolution corrupted England… Bolingbroke rejected the legal and political reforms that created a modern capitalist economy. …But he failed to turn back the clock.

The same battle occurred on the other side of the ocean. albeit several decades later.

And most of America’s Founders apparently were not on the right side.

The Whig Revolution, which had allowed England to develop a modern capitalist economy, did not immediately cross the Atlantic. …In the 1770s, colonial legislatures still regulated the prices for many goods and services and forbade arbitrage and speculation. Colonial courts still accepted “just price” doctrine, allowing judges, all whom were members of a small oligarchy, to overturn contracts when market prices moved against colonial elites. And when crops failed or prices fell, colonial legislatures frequently declared “debt holidays” to prevent creditors from seizing the property of the colonial oligarchs. …Most of the America’s founders were from the small, wealthy elite in the colonies. Identifying with the English gentry rather than the rising middle class, Bolingbroke greatly influenced most of the founders’ views of economics and politics. Most founders, especially Thomas Jefferson and James Madison, agreed with Bolingbroke about the primacy of agriculture, shared his fears of banks and a paper currency, and dreaded industrialization. Most founders accepted Bolingbroke’s policy recommendations.

But Alexander Hamilton had a more enlightened outlook.

Alexander Hamilton was different than other founders. …Hamilton immigrated to America in 1773. Serving as General George Washington’s aide-de-camp, Hamilton observed how a weak Continental Congress imperiled the war effort. …Hamilton had a very different prospective from other founders with the notable exceptions of Washington and John Marshall. Hamilton wanted America to become a dynamic meritocracy. …Hamilton wanted poor, but talented individuals like himself to have avenues other than land ownership to earn wealth. Moreover, Hamilton rejected slavery because it prevented slaves from their full economic potential and made masters indolent and lazy. Moreover, Hamilton rejected racism. “The contempt we have been taught to entertain for the blacks, makes us fancy many things that are founded neither in reason nor experience.” During the Revolution, Hamilton proposed emancipating slaves that agreed to fight in Continental Army. Later Hamilton founded the New York Society for the Manumission of Slaves. Instead of Bolingbroke, Hamilton embraced the Whig Revolution and wanted to bring its economic benefits to the United States. …Moreover, Hamilton was staunch defender of property rights even when it was politically costly to him. As a lawyer in New York City, he successfully argued for the restoration of property of Englishmen and Loyalists that had been seized after the Revolutionary War in violation of the Treaty of Paris and the law of nations.

What about Hamilton’s protectionism?

He’s semi-guilty, but the author explains that Hamilton was mostly looking for a way of funding a modest-sized government.

And as I wrote last month, a modest tariff to fund a very small central government (as all the Founders preferred) would be a great improvement over what we have now.

Moreover, Hamilton even understood the basic principle of the Laffer Curve a couple of hundred years before Art Laffer’s famous napkin sketch.

While some future policymakers misused Hamilton to justify their protectionism, Hamilton was not a protectionist in the modern sense. …In a world in which income and value-added taxes had not been invented, …Hamilton favored a revenue tariff that averaged about 10 percent over a property tax to fund the federal government. Hamilton sought to maximize the federal government’s revenue and provide a modest margin of protection to domestic manufacturers rather than to block imports. Indeed, Hamilton argued: “It is a signal advantage of tax on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed – that is an extension of the revenue.”

I’m not fully convinced that Alexander Hamilton is a libertarian hero (that would entail support for free banking rather than his version of central banking), but I’m looking at him much more favorably after reading this article.

And I’m now significantly less sympathetic to Thomas Jefferson.

I’ll close on a wonky note. In my column about the would-be nation of Liberland, I cited some research on the relationship between “state capacity” and economic prosperity. The notion is that an economy won’t prosper unless a government is both strong enough and effective enough to deter aggression and to provide rule of law (while otherwise leaving the private sector unmolested).

I’m certainly no expert on the Founding Fathers, but it seems that Hamilton had that point of view.

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Thomas Sowell, George Will, and Walter Williams have all explained that the Constitution imposes strict limits on the powers of the federal government. This means, for all intents and purposes, that it is a somewhat anti-democratic document.

And by anti-democratic, I mean the Constitution puts restrictions on democracy (not restrictions on the Democratic Party, though in this case…).

More specifically, it doesn’t matter if a majority of people want Obamacare or a Department of Education. We live in a constitutional republic, a system specifically designed to protect individual liberties from tyranny.

The Founding Fathers obviously didn’t want our freedoms to be subject to the whims of a king, but they also wanted to protect us from the tyranny of the majority.

This is one of the reasons why I’m so happy to share this short video from the folks at the Institute of Humane Studies. The Supreme Court may have wimped out in fulfilling its role of  protecting us against untrammeled majoritarianism, but at least we can understand why it’s a good idea to protect economic liberty.

I particularly like the fact that the video cites the Supreme Court’s horrific Kelo decision.

By the way, if you want to understand the other side of the debate (or if you want to enjoy a good laugh), you can peruse my post on E.J. Dionne’s failure to understand history and constitutional governance.

P.S. I applied the lessons of this video in my post about why the U.S. government should promote liberty rather than democracy in the Middle East.

P.P.S. They probably don’t realize it, but Republicans actually came out against marjoritarianism in their party platform.

P.P.P.S. There is at least one Republican who is against majoritarianism (and for the right reason). Click here for the answer.

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Like the Constitution, the Declaration of Independence is filled with old-fashioned ideas about liberty, freedom, and restrictions on the power of government.

But that’s no fun, at least if you’re a member of the ruling class. Heck, some people are using those musty old documents to argue that the crowd in Washington doesn’t have unlimited power to impose Obamacare. The nerve of those yokels!

There are rumors, though, that the Declaration of Independence is being updated to reflect the modern and enlightened thinking of the political elite.

Indeed, there’s even a draft of this new document, which was leaked when somebody in the Harvard political science department failed to use proper security when emailing edits to allies at CBS, the DNC, the IMF, and Justice Kagan’s office.

Apparently, the drafters are fighting over some of the edits. They know they want to replace “He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.”

But they’re not satisfied with the current language, which reads, “They failed to erect a multitude of New Offices, and sent hither inadequate swarms of Officers to harrass our people, and eat out their substance.”

You can click the link to read the full Draft Declaration of Dependence, but some excerpts are reprinted below to give you a flavor for the new approach.

We hold these truths to be self-evident, that all people should be made equal, that they are endowed by their government with certain unalienable Rights, that among these are jobs, healthcare and housing.–That to secure these rights, Governments must rule over the people, deriving their just powers from the consent of the elite, –That whenever the people becomes destructive of these ends, it is the Right of the Elite to alter or to abolish it, and to institute more Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect the power and control of the elite. …We, therefore, the Representatives of the political elite, in faculty lounges, Assembled, appealing to the United Nations for the rectitude of our intentions, do, in the Name, and by Authority of government, solemnly publish and declare, That the American people ought to be governed by the United Nations; that they are Absolved from all Allegiance to the Constitution, and that all political connection between them and the Founding Fathers, is and ought to be totally dissolved; and that as highly-taxed and dependent States, they have full Power to levy taxes, disrupt Peace, contract new departments and agencies, regulate Commerce, and to do all other Acts and Things which the political elite may of right do. And for the support of this Declaration, with a firm reliance on the protection of the establishment media, we mutually demand your Lives, your Fortunes and your sacred Honor.

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