Not an Economic Problem, A Constitutional One

November 6, 2010 10:00

Our Constitution was established to limit government, to protect the citizens from government. It allowed all to pursue their own personal interests.

Monty Pelerin’s World

This post originally appeared on November 2, 2009. It is an important read today because it was these very issues that drove the latest election:

cover-FoundingFathersMost of us who are troubled about what is happening in this country have no or loose ties to politics. Our concerns arise because of concern for future generations — children, grandchildren and founding_fatherstheir grandchildren. Opposition to various policies and trends is motivated by what we believe works and what doesn’t. Perhaps, I should say that more strongly, by what we know works.

When this country was founded, there was little reason to believe that it would become the envy of the world. Other countries had existed much longer, had infrastructure in terms of schools, industry and culture that did not exist here. All the science and intellectual achievements known to the world had originated outside of this country. Furthermore, our population was motley, initially representing the refuse of advanced societies. Arguably they had little talent and some were criminals who had been exiled to our shores. The intitial population was supplemented by early immigrants best described as “your tired, your poor and your downtrodden.” Yet, in the space of about a century and a half, this country grew to become one of the most prosperous countries on earth. No one, except perhaps our wise Founders, could have envisioned the miracle that occurred.

So how did this happen? Well, it wasn’t government; it was the lack of government. Our Constitution was established to limit government, to protect the citizens from government. It allowed all to pursue their own personal interests. As expressed by Hal Gershowitz and Stephen Porter:

The magic of America, since the nation’s inception, has been the internal gyroscopes of the people, free to gravitate toward each individual’s true north. That, to a great extent, is what American Exceptionalism is and has always been. And it is the Administration’s failure to understand this aspect of the American psyche that is perilous to all of us. In its quest to control healthcare, anything that can remotely be packaged as “protecting the environment” (or, with even more grandiosity, “saving the planet”), executive compensation and nearly every other aspect of our national life, we now have all-powerful bureaucracies answerable to no one but the President and his acolytes in the White House.

The Constitution was successful in its goal of protecting the citizenry, at least for more than a century, despite being under assault from the beginning. Significan deterioration in the effectiveness of the document did not occur until the Twentieth Century. Now, it has been reduced to little more than an artifact of history, an interesting piece of parchment that no longer carries much legal weight.

Our current economic crisis reflects what has been done regarding the emasculation of our liberty and freedom. Economics cannot be understood without understanding the institutional framework within which it operates. The current crisis arguably started to show up in economic data in the late 1970s. Real weekly wage growth showed problems even earlier than that. Today, real weekly wage rates are lower than they were in 1964, having first dropped below that level in the late 1970s and never returning to the earlier level. Our economic problems did not start in 2007.

To understand better how important our Constitution was, one should read the excellent article by Gershowitz and Porter entitled Crossing the Rubicon. It is a remarkable piece that traces the advance of statism, how it has never worked anywhere in the world and what it has done and is doing to our country. Excellent read for those interested.

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