American history between the Revolution and the approach of the Civil War, was dominated by the Constitutional Convention in Philadelphia in 1787. Background rumbling was from the French Revolution. The War of 1812 was merely an embarrassment.
Philadephia: America's Capital, 1774-1800
The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Sociology: Philadelphia and the Quaker Colonies
The early Philadelphia had many faces, its people were varied and interesting; its history turbulent and of lasting importance.
Nineteenth Century Philadelphia 1801-1928 (III)
At the beginning of our country Philadelphia was the central city in America.
Pre-Revolutionary Ben Franklin
Poor Richard was able to retire at the age of 42, and spent the rest of his life as a rich man, dying at the age of 82 with an eye-popping estate.
Second Edition, Greater Savings.
The book, Health Savings Account: Planning for Prosperity is here revised, making N-HSA a completed intermediate step. Whether to go faster to Retired Life is left undecided until it becomes clearer what reception earlier steps receive. There is a difficult transition ahead of any of these proposals. On the other hand, transition must be accomplished, so Congress may prefer more speculation about destination.
Worldwide Common Currency and Corporate Headquarters
The Death of Money
Federalism Slowly Conquers the States
Georgetown, Delaware is a pretty small town, but it's the county seat so it has a courthouse on the town square, with little roads running off in several directions. The courthouse is surprisingly large and imposing, even more, surprising when you wander through cornfields for miles before you suddenly come upon it. The county seat of most counties has a few stores and amenities, but on one occasion I hunted for a barbershop and couldn't find one in Georgetown. This little town square is just about the last place you would expect to run into Sidney Pottier and all the top executives of Walt Disney. But they were there, all right, because this was where the Delaware Court of Chancery meets; the high and mighty of Hollywood's most exalted firm were having a public squabble.
Only a few states still have a court of Chancery, but little Delaware still has a lot of features resembling the original thirteen colonies in colonial times. The state abolished the whipping post only a few decades ago, but they still have a chancellor. The Chancellor is the state's highest legal officer, and four other judges now need to share his workload, which was almost completely within his sole discretion seventy-five years ago. In fact, the Chancellor usually heard arguments in his own chambers, later writing out his decisions in longhand. The Court of Chancery does not use juries.
Going back to Roman times, the Chancellor was the highest office under the Emperor, and in England, the Lord Chancellor is still the head of the bar in a meaningful way. Sir Francis Bacon was the most distinguished British Chancellor and gave the present shape to a great deal of the present legal system. A court of Chancery is concerned with the legal concept of equity, which is a sense of fairness concerning undeniable problems which do not exactly fit any particular law. The Chancellor is the "Keeper of the King's conscience" concerning obvious wrongs that have no readily obvious remedy. You better be pretty careful who gets appointed to a position like that, with no rules to follow, no supervisor, no jury, dealing with mysterious issues that have no acknowledged solution.
Delaware's Court of Chancery evolved in steps, with several changes of the state Constitution over a span of two hundred years. As you might guess, a few powerful chancellors shaped the evolution of the job. Going way back to 1792, Delaware changed its Supreme Court from the design of its Constitution, and George Read was the new Chief Justice. However, it was all a little embarrassing for William Killen, who had been the Chief Justice, getting a little old. Read refused to have Killen dumped, and in this he was joined by John Dickinson, who had been Killen's law clerk. So Killen was made Chancellor, and a court of Chancery was invented to keep him busy.
Under a new 1831 Constitution, the formation of corporations required individual enabling acts by the Legislature and limited their existence to twenty years. However, the 1897 Constitution relaxed those requirements and permitted entities to incorporate under a general corporation law and allowed them to be perpetual. By this time, other states were distributing equity cases to the county level, but Delaware was too small to justify more than a single state-wide Court. That court was attractive to corporations because it could become specialized in corporate matters, but retained a pleasing number of equity cases among common citizens, thus retaining a folksy point of view. In unique situations or those without a significant history of public debate, it was thought especially desirable to strive for unchallenged acceptance of the court's decision.
But other states thought they could see what Delaware was up to. In 1899 the American Law Review contained the view that states were having a race to the bottom, and Delaware was "a little community of truck farmers and clam-diggers . . . determined to get her little, tiny, sweet, round baby hand into the grab-bag of sweet things before it is too late." However, that may be, corporations stampeded to incorporate in the State of Delaware, and the equity of their affairs was decided by the Chancellor of that state. In one seventeen year period of time, the U.S. Supreme Court reversed the decision of the Chancellor only once.
Chancery's jurisdiction was complementary to that of the courts of common law.
It sought to do justice in cases for which there was no adequate remedy at common law.
| A. H. Manchester|
Modern Legal History of England and Wales, 1750-1950
Some legal scholar will have to tell us if it is so, but the direction and moral tone of America's largest industries has apparently been shaped by a small fraternity or perhaps priesthood of tightly related legal families, grimly devoted to their lonely task in rural isolation. The great mover and shaker of the Chancery was Josiah O. Wolcott (1921-1938), the son and father of a three-generation family domination of the court. Most of the other members of the court have very familiar Delaware names, although that is admittedly a common situation in Delaware, especially south of the canal. The peninsula has always been fairly isolated; there are people still alive who can remember when the first highway was built, opening up the region to outsiders. Read the following Chancelleries quotation for a sense of the underlying attitude:
"The majority thus have the power in their hands to impose their will upon the minority in a matter of very vital concern to them. That the source of this power is found in a statute, supplies no reason for clothing it with a superior sanctity, or vesting it with the attributes of tyranny. When the power is sought to be used, therefore, it is competent for anyone who conceives himself aggrieved thereby to invoke the processes of a court of equity for protection against its oppressive exercise. When examined by such a court, if it should appear that the power is used in such a way that it violates any of those fundamental principles which it is the special province of equity to assert and protect, its restraining processes will unhesitatingly issue."
That is a very reassuring viewpoint only when it issues from a person of totally unquestioned integrity, a member of a family that has lived and died in the service of the highest principles of equity and fairness. But to recent graduates of business administration courses in far-off urban centers of greed and striving, it surely sounds quaint and sappy. And many of that sort have found themselves pleading in Georgetown. Just let one of them a bribe, muscle, or sneak into the Chancellor's chair someday, and the country is in peril.
DURING the twenty-five years (1776-1801) government was in Philadelphia, Americans who had rebelled against tight royal rule uncovered many defects in its opposite -- a loose association of states. Loose associations only preserve fairness by operating with unanimous consent, which is, of course, unfair to a thwarted majority, unless a dissenting minority thwarts itself as a gesture of kindness. The Founding Fathers ultimately devised a formula of weakening power by dividing it into layers -- national, state, county, municipal -- and seeking to confine minority dissent to the weakest political unit. Persuasion and peer pressure were given time to work up the ladder of appeal to a wider, more powerful body of citizens. Bottom upward by choice; top-down only in desperation. Furthermore, persuasion first, force as last resort. An implicit third safety valve emerged: if a good idea is smothered by a local concentration of bigotry, appealing to a wider population includes being heard by more viewpoints. No one claims to have authored this whole prescription or foreseen its hidden benefits; it apparently evolved by trial and error. There was another latent discovery for America's sparse population in a hostile wilderness: maintaining harmony was more essential than efficiency. It would be hard to consolidate more Quakerly concepts of governance in one document. Not exactly assembled, it emerged and was admired. The local Quaker merchants were living proof that harmony made riches for anyone, while force only works against weaker people. George Washington the cavalier general came to Philadelphia and gave it a softly Virginian twist, over and over: Honesty is the best policy. It seems to have originated in one of Aesop's Fables.
It is not necessary that the [Constitution] should be perfect; it is sufficient that [the Articles of Confederation are] more imperfect.
Recently examined documentation reveals James Madison, the main theoretician of the closed-door Constitutional Convention, to have been severely contemptuous of state legislatures at this time in his life, and rather severely defeated by John Dickinson in a political quarrel in mid-convention about the powers of small states. From this fragile evidence emerges the idea that in balancing the powers of state and national governments in the "federal" system, it may have been someone else's idea that the greater freedom to move out of an offending state into a more favorable one, would appreciably restrain state legislative abuses. Even with this feature built into the system with the national government to enforce it, Madison is said to have been in a state of depression that the Convention refused to agree to his idea of giving Congress veto power over state laws. It took some time for improved transportation to strengthen this competition between states, but it may not be an accident that Delaware now leads the way in responding to the implicit opportunity.
Philosophy and history are different. The Framers gradually acknowledged a patched charter of tribal allegiance was insufficient and thus adjusted to the idea of a central government. They tweaked a decentralized model of governance to get the states out of the road, without antagonizing them so much they would not ratify it. Although it is commonplace to say the Articles of Confederation were a weak failure, the Articles did reflect American attitudes at the beginning of our formative period. The Constitution would not have been acceptable if the Articles of Confederation had not first been given a trial. By the end of the 1787 Philadelphia negotiation, the nature of the final proposal was to define a few absolutely minimum powers for a national government, identify a few other powers as destructive when in the hands of any other level of government, and leave a vast undefined area: where new and novel problems would be tried out in the states, then passed to a national level if necessary. Anticipating constant mid-course corrections was an important objective for even a minimalist Constitution, not the least of those challenges was to create ways to keep it minimalist. Simplicity itself keeps it hard to change. Starting at the bottom of the layers of government continues to this day to introduce new and unexpected problems to the "laboratory of the states" or even lower, working upward only as proven necessary, or spread nationally only after the solution is highly successful. It is a legacy of slavery, the Civil War, and direct election of Senators (Amendment XVII) that many Americans still fail to welcome the merits of this approach, or lack the patience to try it for their pet ideas. Considering the Articles of Confederation and the Constitution as two documents with continuous goals, we got it right, the second time.
And we got it right in the environment of Eighteenth-century Quaker Philadelphia, where a tolerant examination of new ideas was more venerated than in any other place in the civilized world. With a combination of wisdom and impasse, minor issues were left to the future. It is true this sometimes creates problems of neglect. But it makes it possible to define those few issues which must never change. An unexpected virtue of minimalism surfaced eighty years later: many men understood it well enough to die for it.
"John Marshall and the Constitution"
Much has been written about the separation and balance of powers between the three branches of the federal government. However, the real balance of power in the Constitution in 1787 was vertical, between the central government and the constituent states. Balancing power horizontally, within the central government's branches, is a way of preventing one side of this other argument from tilting the state/federal balance in its own favor, or slowing down the effect of any victories by one side. In other words, it preserved citizen liberty to choose. From this continuing two-dimensional struggle emerges the explanation for filibusters, the seniority system, the confirmation process for Supreme Court and Cabinet appointments. It also calls into question the Seventeenth Amendment, where the state legislatures lost the power to appoint U.S. Senators. In 1786 the states had all the power, in 2009 state power is much diminished; but it is not entirely gone by any means. It is true the cry for states rights, essentially an appeal to the Deity for Justice is futile. If states are to wrest power back from the federal government, it will be by the adroit exercise of powers buried within the balanced powers of the federal branches, but it can succeed if the public ever wants it to succeed. The Framers seem to have overlooked the possibility that federal power could someday outgrow its blood supply, simply growing too big to manage. It is also true the Framers neglected the possibility of a protracted period of disagreement between two halves of the electorate. At least in these particulars, there is room for the further evolution of the Constitutional principle.
While features of the present Constitution can sometimes be linked to the correction of flaws in the Articles, one by one amendment never seemed to be quite enough. Subsequent analysis of Original Intent has often had to contend with the unspoken intent of earlier negotiators to strengthen partisan advantage in later struggles. The political battles being fought at the beginning, which except for slavery are substantially the same today, were sometimes being promoted for reasons which now seem merely quaint. Fine, everyone can agree it was complex. Still, there was a recurring uneasiness: what was the underlying flaw in the Articles? What, as they say, is the take-home point?
One widely accepted summary, probably a correct one, of what was centrally wrong with the Articles of Confederation, lies in a concise observation, which follows, from Edward S. Corwin's book John Marshall and the Constitution:
"The vital defect of the system of government provided by the soon obsolete Articles of Confederation lay in the fact that it operated not upon the individual citizens of the United States but upon the States in their corporate capacities. As a consequence, the prescribed duties of any law passed by Congress in pursuance of powers derived from the Articles of Confederation could not be enforced."
And that's how many Revolutionary Americans, possibly most of them, had wanted to have it. They were in revolt against all strong government, not just the King of England. They surely would have applauded Lord Acton's declaration that "All power tends to corrupt, and absolute power corrupts absolutely." Thirteen years of near-anarchy taught them they must at least give some limited powers to a central government, but it was to be no more than absolutely necessary. For some, the Ulster Scots, in particular, even the absolutely minimum amount was still just a bit too much. In effect, these objectors wanted a democracy, not a republic.
To deconstruct Professor Corwin's analysis somewhat, the equality-driven followers of Thomas Jefferson believed the insurmountable obstacle for uniting sovereign states is that they are sovereign, and won't give it up. The merit-driven followers of Alexander Hamilton, Robert Morris, and George Washington bitterly resisted; in business and in war you need the best leaders to rise to power. The function of common men is to select the best among themselves to be leaders. Only James Madison seems to have grasped that ideal government might tend more toward a republic for purposes of the enumerated federal powers plus enumerated powers specifically denied to the states. For lesser issues, perhaps a purer democracy would be just as workable. However, in operation, it took scarcely a year to discover that the common man would not automatically select the best man he knew to be his representative. In fact, there exists a considerable populist sentiment, that wealth and success outside government are actually disqualifications for office. To some extent, this reverse social Darwinism is grounded in an unwillingness of the upper class to serve in government, perhaps because service to the country interferes with the lifestyle of unrestrained power and wealth which other occupations allow, but is forbidden to public servants. In any event, we persist in the fruitless argument whether America is a democracy or a republic; it was designed to be a mixture of both. Within the time of the first presidency, the unattractive realities of mixing human nature with elective politics transformed the meanings of the Constitutional document to something that was never written there, and other nations have largely failed to grasp. It apparently also worked a major transformation in its main author. James Madison first quarreled with his ally, Alexander Hamilton, and joined forces with the Constitution-doubter Thomas Jefferson. His mentor and idol, George Washington, essentially never spoke to him again.
States rights no longer confronts America directly, because the Founding Fathers managed to get around it until the Civil War, and then the Fourteenth Amendment enabled the federal judiciary to attenuate state sovereignty somewhat further without eliminating the architecture of a federation of states. In other words, in two main steps we deprived the states of some sovereignty, but no more than absolutely necessary, and we took more than a century to do it. The European Union currently faces the same obstacle; this is how we solved it. If they can get the same result in some other peaceful way, good luck to them. Our framers used the language "Congress may...or Congress may not..." They only dared to strip state legislature of a few powers because they needed the legislatures to ratify the Constitution, a gun you can only fire once. Thus, they forbade states the right to issue paper money, the power to interfere in private contracts, and such, as enumerated in Article I, Section X, where the operative phrase is "The states are forbidden to..". The framers were willing to strip the unformed Congress of many more specific powers than the all-too-existing states; the Constitution can be read as a proclamation of the powers which any central government simply must possess. There might be other desirable powers, but here is the minimum. After eighty years, individual Southern states asserted their unlimited powers extended to nullification and secession, and because of a perceived need to preserve slavery would not back down. The Constitutional consequence of this national tragedy was the Due Process section of the Fourteenth Amendment, which has since been purported by the Supreme Court to mean that whatever the federal government may not do, the states may not do, either. However, Due Process traces back to the Magna Carta and has been so tormented by an interpretation that for the purpose stated, it is growing somewhat too elusive to remain useful. For historical reasons, we never gave a fair trial to the original proposal to address the federal/state dilemma. The Constitutional Convention was held in confidence, many delegates changed their minds along the way, and many ideas were more perceived than enunciated. It is plausible that the original strategy originated with Madison's teachers and emerged from many discussions, but there were several delegates in attendance with the sophistication to originate it. In a convention of egotists, there were even a few who would put their ideas in someone else's mouth.
The concept of how to curtail power in a non-violent way, can be called Regulatory Competition. Mitt Romney seemingly plans to promote the idea as a central feature of his political run for President of the United States, using a variant he has developed with Glenn Hubbard, the Dean of the Columbia University School of Business. The idea does still work reasonably well with state taxes and corporate regulation. If a state raises a tax, estate tax for example, in a burdensome way, people will flee to a state with more reasonable taxation. Corporations have learned how to shift legal headquarters to Delaware and other states which court them, and in really desperate cases will move factories or whole businesses. There is little doubt this discipline is effective, and little doubt that some cities and states have been punished severely for encouraging an anti-business environment. Whether the Fourteenth Amendment could be cleverly amended to expand this competitive effect without reintroducing segregation or the like, has not been seriously considered, but perhaps it should be. There are however not too many alternatives to consider.
As far as advising our European friends is concerned, it would be important to point out that the original version of Regulatory Competition completely depends for its effectiveness on the freedom to flee to some other state within the union. A common language is a big help to unity, but the ability to move residence is essential, so for practical purposes, both a common language and freedom of migration are required. Underlying such concessions is a sense of tolerance of cultural differences. That is unfortunately where most such proposed unions have either resorted to violence or failed to unite. And of course, the power which might otherwise be abused must then be shifted from the federal, back to a state level. What surfaces is a sort of one-way street? It remains far easier to devolve into little statelets than to unite for the benefits of scale. A working majority under the likes of Thomas Jefferson might have been assembled in the Nineteenth century but was held back by coping with the expanding frontier. During the Twentieth century, it would have been held back by the need to deal with world power. The Second Tea Party seems to have some inclination along these lines, but it remains to be seen whether some overwhelming need for world power will once more overcome the obvious national ambivalence about it.
The revised proposal for the regulatory competition takes the proposal to a different level, possibly a more workable one. Workers in the United States can freely move from one state to another but are restrained by national laws from equally free movement between nations. Removing that barrier makes the European Union attractive, although it inflames local nationalism. Since it seems more palatable to allow the currency to move, perhaps a little tinkering would be sufficient to permit uniform monetary rules to be the hammer which forces nations into permitting free trade on a global scale. The people themselves can remain at home in their national costumes, perhaps perfecting their religions in more churches and language skills in more schools. Meanwhile, the insight of Adam Smith would prevail for the long-term prosperity of everyone. Each party in a transaction feels enriched by it, the seller preferring to have the money, and the buyer preferring to own the goods. Multiplied a trillion-fold, these improvements in everyone's condition result in the steady enrichment of all.
|President James Madison|
JAMES Madison, Washington's floor manager at the Constitutional Convention of 1787 in Philadelphia, stated the main necessity for holding the Convention at all arose from selfish and untrustworthy human nature. In the theology of the time, mankind was stained with original sin. Particularly in France however, many 18th century romanticists responded to the Enlightenment by defiantly declaring human nature is born pure in heart. In their view, current evils grow from the pollution of civilization, without which it might be possible to have no government at all. At its root, this romanticism was an outcry against progress and civilization, blaming the world's troubles on the Industrial Revolution, so to speak. From Madison's skeptical viewpoint, the most awkward feature of the Romantic Period was its adoption by his Francophile friend and neighbor, Thomas Jefferson, current American ambassador to France. Madison recognized that Jefferson and Patrick Henry were prepared to assail any attempt to add power to a central government, particularly if it weakened the power of Virginia. As indeed they promptly came forward to do.
|Treaty of Paris|
After fighting an eight-year war for freedom, American belief was wide-spread that it was time to draw back from such anarchy. But there was widespread suspicion in every other direction, too. England seemed to concede, not defeat but only current military overstretch, possibly displaying reluctance to see its former colonies with full sovereignty. George III might wait for America to weaken itself and then try to take them back. Britain almost couldn't do anything right; it was also possibly up to no good when the Treaty of Paris astonishingly conceded land to the Mississippi instead of stopping at the Appalachians. Even our ally France nursed regrets for its somewhat older concessions after the French and Indian War. If even the two mightiest nations of Europe could not maintain order in the vast North American wilderness, perhaps they felt the inexperienced colonies would soon collapse from the effort. Further intra-European wars seemed likely, and could soon spread from Europe to the Western hemisphere. The guillotine was bad enough, Bonaparte would be worse. Our governance as a league of states was in fact, only a league of armies. The Articles of Confederation would not quell inter-state rivalries in peacetime, as only four years (1783-87) experience after the Treaty of Paris were clearly foreshadowing. It was time we listened to Benjamin Franklin, who had been arguing since the Albany Conference of 1745 for unification of the colonies, and to Robert Morris who had been arguing for a written constitution since 1776, a bicameral legislature since 1781, government by professional departments instead of congressional committees, and the ability to levy national taxes -- since at least 1778. Professor Witherspoon of Princeton had provided some ideas about how to make these proposals self-enforcing, Washington was firmly behind a Republican system and opposed to a monarchy. On the other hand, everyone knew that under the Articles of Confederation the thirteen States had often refused to pay their share, abused their ability to deal independently with foreigners, dealt unfairly with their neighbors, and capriciously mistreated their own citizens. It was time to act boldly. With a blue-ribbon convention of national heroes behind these simple ideas, surely it would be possible to convince the sovereign state legislatures to dethrone themselves.
Two men quietly applied even deeper thinking than that; Benjamin Franklin of Pennsylvania, and John Marshall of Virginia. Both of them had served in state legislatures, both were dismayed by the experience. Franklin also had a long period of close-up observation of the British Parliament, suffering personal abuse there, and had reason to reflect on the earlier abuses by that Parliament under Cromwell during the English Civil War. Certain bad tendencies seemed universal in legislative bodies. Although John Marshall was not a member of the Virginia Constitutional delegation in 1787, he was active in the politics of the group it represented back home. Both Marshall and Franklin had reason to be uneasy about misbehavior in representative bodies, whether called legislatures, congresses, or parliaments. When people said states misbehaved under the Confederation arrangement, they really meant legislatures misbehaved. Franklin did what he could within the Convention to curb this observed behavior by enumerating limited powers and endorsing power balanced against power. When he had nudged it as far as he could, he wearily agreed to give the product a try. Franklin did not trust Utopias, but he had lived among Quakers for years, observing one Utopian society which seemed to endure without resorting to tyranny.
The Constitutional provisions in Article I, Section X became the heart of what the 1787 Convention wanted to change about the relationship of the national and state governments.
States are forbidden to ...
"emit bills of credit, make anything but gold or silver a legal tender in payment of debts, pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts."
This brief clause is almost a presentment of what state legislatures were doing, which serious patriots regarded as wholly unacceptable. Failure of states to abide by the terms of international treaties must be included in such a summary, although the new Constitution went beyond the powers of states by locating treaties beyond the power of even Congress to change, once ratified. Some observers in fact feel that within the First Article clause, protecting the sanctity of contracts was really the nut of the matter. In one way or another, most states seemed to resort to paying their debts with inflation, somehow failing to recognize that borrowing never pays debts, it only postpones them. The great bulk of this new nation's business was to be conducted as voluntary agreements between two contracting parties. The State -- and the states -- were to stay out of the private sector, except as referee, to see that both sides kept their agreements. As a footnote, the matter of government intervention in private affairs was to rise again in the behavior of the Executive branch in the 1937 Court Packing uproar, and in the 2009 health insurance legislation. Some critics, therefore, have discomfort that the heaviest Constitutional weight was placed by the Founding Fathers on protecting private property. Are not other issues more important, they ask, like life, liberty and the pursuit of happiness? The Founders, of course, we're here not ranking benevolences by value; they were stating principal urgencies for convening the meeting. In a strange unintended way, they here stumbled on the right to property as the foundation for all other rights. But John Marshall understood it was true and was to spend thirty years hammering it into place. People broke individual promises by defaulting on debts; they did the same collection as governments, using inflation.
To this day, no one knows quite what to make of Owen J. Roberts, founder of one of Philadelphia's largest law firms. He was Prosecutor of the Teapot Dome scandal, Dean of the University of Pennsylvania Law School, Republican appointee to the U.S. Supreme Court. But then, he abruptly became the source of one of the most radical revisions of our system of government since the Declaration of Independence. Nothing in his prior career and nothing afterward in his subsequent civic-minded retirement from the Court seemed to suggest any radical turn of character had taken place. He has been compared with a famous baseball pitcher who threw right-handed or left-handed at will, unexpectedly, capriciously, who knows why.
The issue went far beyond one clause in the Constitution, but the commerce clause was the focus point. Under the limited and enumerated powers allowed to Congress by the Constitution was :
The Congress shall have power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.
That used to be called the interstate commerce clause until the Supreme Court announced its decision in the case of Wickard v. Filburn. When linked with the Tenth Amendment, granting to the States the power to regulate everything not specifically granted to the Federal government, this clause in the Constitution was universally taken to mean that the States had control of commerce within their borders, while Congress would control interstate commerce. Wickard v. Filburn took all that power from the states and gave it to Congress, which henceforth would regulate commerce. John Marshall had certainly triumphed over the hated state legislatures, but the Supreme Court suddenly lost its power to overrule Congress, too. One side had won the old argument, by silencing the umpire. No wonder Franklin Roosevelt started annual celebrations called Jefferson-Jackson Day dinners.
To describe the background: The 1929 stock market crash was quickly followed by the economic Depression of the 1930s. Nothing of this magnitude had been seen before, and there was a stampede to try new and untested solutions. Even government action which actually worsened economic conditions was felt justified if it conveyed to the frightened public the image that its leaders were taking firm action. Since Socialism and Communism were among the solutions grasped for, many unfortunate actions were felt justified as a way to control the Bolshevik threat. Many of these New Deal actions were declared unconstitutional by the Supreme Court since they involved sweeping revisions in the way all commerce, internal to the States as well as interstate, was conducted.
The Depression and financial panic continued through the 1936 Presidential election, which Roosevelt won in a landslide. Immediately after the start of the new term, he announced a plan to increase the number of Justices on the Supreme Court, appointing new ones more to his liking. He was at pains to point out that seven of the nine life incumbents had been appointed by Republican Presidents. This was, of course, the restraint intended by the Constitutional Convention, and the idea of packing the Court with new appointees was exactly what Jefferson and Jackson had tried to do.
In the meantime, the case of Filburn, a dairy farmer, came up. One of the New Deal agencies had assigned him a quota of 200 bushels of wheat he could grow on the side, as part of an effort to raise wheat prices by reducing supply. Filburn had raised 400 bushels, but consumed the extra wheat for his own personal use, hardly a matter of interstate commerce. The Court had repeatedly declared laws like this to exceed the interstate commerce limitation and were thus unconstitutional for the Congress to enact.
Well, Owen Roberts changed his position, Filburn lost his case. Forever afterward, this change of position was referred to as the switch in time, that saved nine. Since that time, the Court has rarely had the courage to rule any action of Congress unconstitutional, even though it is true that Congress promptly and resoundingly rejected the court-packing proposal.
And furthermore, the power of the state legislatures has shriveled because all commerce (except insurance and real estate) is federally regulated, with a corresponding vast increase in the size of the Federal bureaucracy, as Congress relentlessly pushes to intervene in commerce among the several states, formerly known as the Interstate Commerce Clause. Franklin Roosevelt had a certain right to gloat at Jefferson-Jackson Day dinners.
A few weeks before he died, Owen Roberts had all his papers burned. Apparently, we will never know whether the present outcome was the result he had in mind. Since he was later the author of Alfred Barnes' will, which strenuously sought to prevent the transfer of the Barnes art collection to Philadelphia County, anything written by a lawyer can apparently be reversed by other lawyers. One would have supposed that either the Original Intent would govern, or else the opinion of the Supreme Court on what the Constitution means, would prevail. Franklin Roosevelt showed us there is a third possibility: the President can overrule the Court by intimidating it.
And so, after the Revolution was finally over, there was a third war between Pennsylvanians and the Connecticut born settlers of the Wyoming Valley. This time, the disputes were focused on, not the land grants of King Charles but the 1771 land sales by Penn family, most of which conflicted with land sales to the Connecticut settlers by the Susquehanna Company. The Connecticut settlers felt they had paid for the land in good faith and had certainly suffered to defend it against the common enemy. The Pennsylvanians were composed of speculators (mostly in Philadelphia) and settlers (mostly Scotch-Irish from Lancaster County). Between them, these two groups easily controlled the votes in the Pennsylvania Assembly, leading to some outrageous political behavior which conferred legal justification on disgraceful vigilante behavior. For example, once the American Revolution was finally over (1783) the Decision of Trenton had given clear control to Pennsylvania, so its Assembly appointed two ruffians named Patterson and Armstrong to be commissioners in the Wyoming Valley. These two promptly gave the settlers six months to leave the land, and using a slight show of resistance as sufficient pretext, burned the buildings and scattered the inhabitants, killing a number of them. One of the weaknesses of the Articles of Confederation was thus promptly demonstrated, as well as the ensuing importance of a little-understood provision of the new (1787) Constitution . No state may now interfere in the provisions of private contracts. Those with nostalgia for states rights must overcome a heavy burden of history about what state legislatures were capable of doing in this and similar matters, in the days before the federal government was empowered to stop it.
A flood soon wiped out most of the landmarks in the Wyoming Valley, and it had to be resurveyed. Patterson, whose official letters to the Assembly denounced the Connecticut settlers as bandits, perjurers, ruffians, and a despicable herd, boasted that he had restored, to what he called his constituents, "the chief part of all the lands". The scattered settlers nevertheless began to trickle back to the Valley, and Patterson had several of them whipped with ramrods. As the settlers became more numerous, Armstrong marched a small army up from Lancaster. He pledged to the settlers on his honor as a gentleman that if both sides disarmed, he would restore order. As soon as the Connecticut group had surrendered their weapons, they were imprisoned; Patterson's soldiers were not disarmed at all and assisted the process of marching the Connecticut settlers, chained together, to prison in Easton and Sunbury. To its everlasting credit, the decent element of Pennsylvania was incensed by this disgraceful behavior; the prisoners somehow mysteriously were allowed to escape, and the Assembly was cowed by the general outrage into recalling Patterson and Armstrong. Finally, the indignation spread to New York and Massachusetts, where a strong movement developed to carve out a new state in Pennsylvania's Northeast, to put a stop to dissension which threatened the unity of the whole nation. That was a credible threat, and the Pennsylvania Assembly appeared to back down, giving titles to the settlers in what was called the "Confirming Act of 1787". Unfortunately, in what has since become almost a tradition in the Pennsylvania legislature, the law was intentionally unconstitutional. Among other things, it gave some settlers land in compensation that belonged to other settlers, violating the provision in the new Constitution against "private takings", once again displaying the superiority of the Constitution over the Articles of Confederation. It is quite clear that the legislators knew very well that after a protracted period of litigation, the courts would eventually strike this provision down, so it was safe to offer it as a compromise and take credit for being reasonable.
It is useful to remember that the Pennsylvania legislature and the Founding Fathers were meeting in the same building at 6th and Chestnut Streets, sometimes at the same moment. Books really need to be written to dramatize the contrast between the motivations and behavior of the sly, duplicitous Assembly, and the other group of men living in nearby rooming houses who had pledged their lives and sacred honor to establish and preserve democracy. To remember this curious contrast is to help understand Benjamin Franklin's disdainful remarks about parliaments and legislatures in general, not merely this one of which he had once been Majority Leader. The deliberations of the Constitutional Convention were kept a secret, allowing Franklin the latitude to point out the serious weaknesses of real-life parliamentary process, and supplying hideous examples, just next door, of what he was talking about.
The Seventeenth Amendment of the Constitution provides for the direct election of U.S. Senators; prior to that, the states could decide for themselves how to select their Senators. The Amendment was proposed in 1912 and ratified in 1913. Today, most people have no opinion whether the Amendment was good or bad, necessary or unnecessary. The Progressives of 1912 professed to be shocked, shocked, that wheeling and dealing went on in the state legislatures every time there was a vacancy in the Senate. Indeed, few contestants on TV quiz shows would be able to tell you what the Amendment was about. It would be hard to find a person who would, without further study, be opposed to a reaffirmation of "The Senate of the United States" shall be composed of two Senators from each State, elected by the people thereof, for six years; and such Senators 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."
If you search for reasons -- why in the world would there be a fuss about this topic, 125 years after the "Constitutional Convention -- several plausible reasons are stated, all of them amounting to legislature incompetence. Such as deadlocks resulting in vacancies remaining unfilled, influence by corrupt political organizations and special interests through the purchase of legislature seats, and neglect of duties by legislators because of politics. Even though news of these matters has failed to persist in the national recollection, they seem plausible enough; it sounds like local politics, all right. But the plausibility was there in 1787, too, and surely the founding fathers expected something like that when they let the States select their Senators as they pleased. The whole idea surely was to give the states additional reassurance that they could block any further transfer of state power to the federal government; direct election of senators clearly reduced the power of state governments in the federal/state struggle. Mostly, of course, by the State Legislators selecting one of their own members to go to Washington.
We have here a tilting of our governance from a Republic toward a Democracy, following the philosophy of John Marshall, of all people, that the behavior of all State legislatures everywhere will inevitably lead to mischief. Just a minute, please, let's give this a little thought. Surely the vast amounts of campaign money required to run for a Senate seat compare with the amount a special interest would have to spend to buy a majority in the Legislature of a State. As a practical matter, most special interests have lost interest in State politics and spend their money in Washington -- except for those few special interests that are exclusively State regulated. This comes down to the insurance and real estate industries, with insurance only there because of the McCarran Ferguson Act. This isn't only because of the Seventeenth Amendment, it also has to do with Franklin Roosevelt's Court-packing attempt, which is discussed elsewhere.
|" Plato" using Leonardo da Vinci as model.|
The idea of a Republic, originally set down by the Greek philosopher Plato, was that a small group of elite philosophers (you will have to forgive his professional biases) who meet together occasionally, would be better able to pick a member of their group for higher responsibilities, than would the populace. The inner circle would know who was an alcoholic, a phony, a pervert, a coward or a loafer, whereas these qualities can be concealed from mass audiences long enough to get elected. Such an in-group in a legislature may pick a bad person, or deliberately reject a good one, but they do it on purpose, not because they are fooled. The issue of direct election of Senators comes down to whether you think it is more likely that a legislature will be corrupt, or the voting population will be ignorant. Hard choice.
Meanwhile, election to the State legislature has been reduced to an inconsequential backwater, almost guaranteed to have an adverse effect on the members. There was a time when people who wanted to be U.S. Senator knew they must first run for the Legislature, where their skills could be tested and perfected. National affairs became State affairs, with legislators well aware that they could unseat a Senator whose national behavior displeased them. There are many States, Pennsylvania among them, who collectively pay far more federal taxes than they receive in federal benefits. Call it pork barrel if you like, the present degree of interstate wealth redistribution could not possibly continue at present levels if we repealed the XVII Amendment.
|Peace Treaty of Westphalia 1648|
Europeans, long accustomed to providing Americans with cultural models, sometimes have a little trouble acknowledging the emerging European Union is based on the American design of 1787 Philadelphia. So perhaps it is tactless to emphasize they might encounter some of the same problems. The success of our design is a good reason to imitate it, and may, in fact, be a chief reason to boast about it. But look at it another way. Since we are uncertain why many provisions work so well, we are reluctant to change them; but the proud Europeans cannot be expected to adopt them for a vague reason like that. The main point is to maintain the right degree of vigilance and flexibility, a difficult measurement to make or to transfer to different circumstances. Our Constitution is more right than wrong, so it was intentionally made hard to change. Technically the Constitution has been amended twenty-seven times. Omitting the Bill of Rights, minor technical changes leave us with only five substantial amendments in two centuries, mostly enlargements of the voting franchise. But notice on top of a small base, we have built a legal structure of 100,000 pages of Federal statutes, almost a million pages of regulations, and at least double that number of state laws. Our legal system has many flaws, but smaller ones are easier to change. The great danger for Europeans lies in taking a similarly huge body of multi-nation statutes, then attempting to cram them into a constitution which by definition has been made hard to change. James Madison was not in a position to see this point. Looking for it in The Federalist Papers is futile because they were written to persuade New York to ratify the Constitution, and contain a moderate amount of slant. Add to all that a recognition that the U.S. Supreme Court makes a hundred little amendments every year. It follows it would be bold indeed to list a handful of examples of what the Europeans should avoid at all costs, or omit at their peril. One point seems undeniable, consolidating a number of former colonies is easier than consolidating sovereign nations. Nations start with more sovereignty, so they individually have more power to lose in a consolidation.
The success of our design is a good reason to imitate it, and may in fact be the chief reason to boast of it.
The people in power in the individual nations of Europe, and the political factions which elected them don't really want to give up power to a central government in Strasbourg and Brussels. They wouldn't be human if they did. Much the same reluctance inspired our thirteen colonies in the Eighteenth Century, and we circumvented it by excluding state officials from the ratifying conventions. Imagine telling that to the Prime Minister of Great Britain. Having multiple sovereignties breeds jealousies, particularly when the issue is governance. Our ratifying process was rancorous, and echoes of it still reverberate. If transitions are too rapid, even from a bad system to a good one, changes can prove disruptive. For ousted incumbents, all transitions are too rapid. The Europeans additionally have a big problem we didn't have, of multiple languages, so harmony will be slower to arrive -- try to imagine a common market in the Tower of Babel. By lacking multiple languages to rally around, we stumbled into a two-party system, which is actually a big improvement over more-or-less proportional representation by multiple parties. Without having any foresight on the issue, we established a system in which "deals" are made internally and voluntarily, between the extremists within each of the two major parties before the November elections, because by then the central issue has become whether the party might not win with a particular candidate standing on a particular platform. The policy positions of the nominees of both major parties draw closer together, and we don't get a revolution when one of them does win, even by a single hanging chad or questionable mortgage. Unfortunately, the candidates are usually so close to the haphazard process of pre-election compromise that they often consider it less binding than the public does. But by major contrast, in an overtly multi-party system a coalition is formed after the election is over, so the "deals" between splinter parties must also be made after the election is over; voters are completely cut out of the most important decision-making. Splinter parties are an easy recourse for nations with many minorities and are to be avoided at all costs. If a unified nation really cannot be constructed without such recourse, perhaps they would be better off with a King. Since political parties were not mentioned in the American Constitution, this advantage of a two-party system has never been widely debated.
Our experience teaches one more important principle, unwritten in the Constitution. The outstanding message of the American experience from 1787 to 1850, especially the twenty year period after Washington's presidency (and quite unforeseen by the Founding Fathers), is that no party in power can see any merit to the rights of the minority until it has itself spent some time out of power. Nor can any party of complainers and reformers see any merit in prudent caution until it has itself spend some time wielding power. Let's suggest a rule to the Europeans: every political faction is untrustworthy until it has spent two terms in office, and then two terms out of office. It would appear it takes even longer for political parties to mature than it does for governments. We achieved this hat trick by starting out with an Electoral College that didn't work very well, most particularly in the tied election of 1800. Once the Electoral College served its purpose of effecting compromise at the Constitutional Convention, we have largely ignored it as a result of the 1800 fiasco. Perhaps another approach is to change it in stages, considering the Articles of Confederation as a preliminary step to enacting a Constitution, as it were. Unfortunately, most European nations can point to several constitutions in their past, without significant progress toward continental unity. It even seems likely the main problem is not in the Constitution at all, but in wider differences between components at the outset. And a long history of struggles in the past, which we forgot when we crossed the ocean because so few wanted to repeat the stormy voyage.
Maybe even that assessment is too generous to our own history; after all, in 1860 we had our Civil War. You'd certainly hate to think it was essential to have one of those until you reflect that Europe really has had four or five major wars during the past two hundred years. Could it actually be true that a peaceful union leads to further peace? George Washington denounced standing armies, while Dwight Eisenhower warned of the military-industrial complex. Perhaps both of them were warning that war-like behavior leads more quickly to war, by eliminating preliminary steps.
|The Records of the Federal Convention of 1787||Farrand's Records|
|Chart of the Thirteen Original Colonies||American History|
|U.S. Constitution||Legal Encyclopedia|
THE Global Interdependence Center (GIC), founded by Nobelist Lawrence Klein in 1976, brings noted foreign financiers to address Philadelphians interested in finance, and takes those Philadelphians abroad to return the visits. It's a gracious, entertaining, and highly stimulating travel club of very nice folks. Its 25th Annual Monetary and Trade Conference (in 2001) was especially exhilarating. Christian Noyer, President of the Banque de France, gave a description of the rationale and direction of the European common currency. Since he was the Euro's driving force right from the beginning, the experience of hearing him was pretty much like hearing Alexander Hamilton tell the story of the founding of the American banking system. Such a notable event needs to be reported.
Christian Noyer urged that the central concept of the European Union is deliberate, voluntary surrender of national sovereignty -- for a mutually beneficial purpose. The declared purpose of the limited surrender of national control of the currency is economic; price stability, lower interest rates, the stimulation of international trade by lowering transaction costs. But the unstated, grander, purpose is the elimination of war. Because the limited technical purpose has been achieved in almost all areas, the grander purpose of eliminating war has not been an accident. With this simple, even humble, declaration it immediately becomes possible for a mildly irritated American audience to understand that European reluctance to become our active military ally grows out of a highly commendable set of motives, and widely differing historical experiences.<
As things worked out, the new nations who have recently joined the Union ("The U") are anxious to modernize, because the people of those nations demand modernization and their leaders must agree to achieve it. Inflation, that hitherto inevitable fund-raiser for national governments, must be eliminated in order to join and stays eliminated because the other members of The U will not tolerate it in a partner. In his curious way, "price stability" has placed the Union on the side of the people against the locally powerful, although it would be untactful to emphasize it. From the elimination of inflation comes lower interest rates, and from that, a stable currency. From that comes economic growth, for which the political lingo seems to be "modernity". As a consequence of this undeniable success, all nations in the area want to join the Union, and none wants to leave it. If that prevailing attitude doesn't lead to the elimination of what might then be a civil war, it's hard to know what will eliminate it. The marvel of all this skillful analysis is how natural, soft and modest it sounded, feeling like an old soft shoe. Eventual political unification is clearly an old dream in Noyer's head, but for now, he seems content with the vindication that it is possible to have a currency without having a country control it. It seems to be a steamroller of economic logic, flattening out the pretenses of merely political power.
No less an economist than Martin Feldstein has written that stable unified currency is doomed in the European context of widely diverse labor markets; Noyer seems pleasantly serene in the face of this argument. He wouldn't say so, of course, but some in the audience got the idea that Noyer probably believes the power of this cooperative idea will eventually discipline the unions the way it disciplined the politicians. One certainly hopes so, for the sake of this smooth, likable French aristocrat.
For example, the north European states, Germans, in particular, must resign themselves to subsidizing the Mediterranean nations for years to come, working a hard work ethic while they watch their wards live an easier one. But it can be accomplished; New England has been subsidizing Mississippi for more than a century, and Appalachia has been fighting the rest of the country's wars for them since 1960. Lincoln, for example, was an ardent Whig, which in those days meant an advocate of helping commerce by the intervention of government. That is essentially a 17th Century French idea, said to originate with Cardinal Mazarin and Jean-Baptiste Colbert. Whether it is useful to continue the same idea for four later centuries is an emotional issue in a class with our own reluctance to change a word of the Constitution. There is even a shadow of present concern that Americans will have so forgotten the lessons of free interstate commerce that they might somehow surrender it for some other blandishment. Certainly, free international trade has its enemies. The abolition of slavery was, of course, an overdue achievement, too, but perhaps our long slog toward equal rights has allowed this second crusade to overshadow the history of what really was the main one. In case anyone feels impelled to start a quarrel about this viewpoint, let me remind him that Quakers started the abolition movement, right here in Philadelphia, and have nothing to apologize about, for maintaining the Union was a more important justification for Civil War that was the abolition of slavery.
With the American Civil War repeatedly reminding us how dangerous it can be for even unified nations to disagree about vital regional issues, it is useful to review such American inter-state friction even closer to the time of unification, namely the repayment of Revolutionary War debts. Here, the American post-unification memories were still about the same as pre-unification. Essentially, only the legal documents had changed very much. Secretary of the Treasury Alexander Hamilton was trying to arrange equitable federal assumption of all thirteen state war debts after Virginia had already paid off its bonds and obviously had thus given up the leverage of refusing to pay them. Virginia at that time was the largest of the component states, and because George Washington was President, Virginia was politically very powerful. But submerged within the now more powerful national government and subject to its rules, Virginians were now in quite a new position. Because Hamilton was trying to establish a good international credit reputation for the new national government, and because he wanted to acquire a creditor's power over all the states, he was anxious for the federal government to assume all state debts. Naturally, Virginians believed they would not have paid off the bonds if they had known this was coming. That's different in this case from knowing the rules before they acted. Imaginative alternatives were limited because the recent war had left no money in any treasury, or even likelihood that foreigners would extend credit. Because the Europeans chose to create monetary union as a step toward political union, the problem confronted European negotiators who were still positioned on behalf of independent sovereign states. The Greek government was skirting close to default on its bonds, whereas in the other case the
The solution reached was to mollify Virginia with a political plum, the location of the Nation's capital named Washington across the Potomac from George Washington's home, potentially directing the flow of Atlantic trade to the Potomac and to Virginia. Philadelphia was intensely displeased, and there are remarkably few statues and mementos to Virginia patriots to be found in that city, even today. However, the political maneuver remains as a classic; when negotiations reach an impasse on some central issue, try to balance the political debt with arrangements which have little to do with the issues at hand. In the case of the European Union, the Greeks have no money and probably can never repay the present bailouts, let alone any extra future indebtedness. Because of the recent international recession, other sources of funds from unrelated nations may well be unavailable. Argentina has recently nationalized a huge Spanish oil developer operating on the Argentine property, so there is a question whether the Spanish banking system is affected in some way that will further strain the Greek default, and thus further drying up sources of European credit. China is beginning to show signs of the Liquidity Trap, where ample funds are available in its banks but no one wishes to borrow money to build facilities, to produce goods, which the Chinese may not be able to sell. So, there are signs available to even the casual observer that it may simply not be possible to find the money to finance another Greek bailout, except to go back to the Germans. Since Adolph Hitler within recent memory had come close to conquering all of Europe militarily, there is understandable reluctance to appeal to Germany to become the rescuer of Europe, financially. The situation thus comes close to crying out for a solution that benefits some rescuer other than Germany, or which benefits Germany in some way that is not monetary. Like it or not, Germany has already rescued East Germany once, Greece at least twice, and can expect several more decades of subsidizing its less provident fellow Europeans. It is getting to be time for the rest of Europe to express its gratitude in some tangible, visible way.
Banks have long operated in a dual system of regulation, state and federal, which permits some shifting back and forth between regulators. Mergers sometimes confuse matters further, and a system of one-bank holding companies adds to the stew. Local banks, waving the red shirt of domination by Wall Street at their state legislatures, have resisted interstate banking in a wide variety of ways. Sometimes a customer finds that funds transfer between two branches of the same bank must be treated as out-of-state action, and so on. Inevitably there is a certain amount of dealing by subsidiaries which are not recorded on the books of the home bank of a bank conglomerate in ways prescribed by the subsidiary's regulator, or not recorded at all. Equally inevitable is the accusation of off-the-books illegality by competitors, politicians, or the merely captious. Fine points of these legal and accounting arguments must be left to experts, peer review, and courts. Muttering Enron at every opportunity, accusers may be right that some of these arrangements have stepped over the line; partisans in Congress and the legislatures, on the other hand, may be correct that existing law is bad law. This is not a good place to debate either point.
It does seem appropriate to notice that banking has long been massively inefficient and that much of this inefficiency has been imposed by regulators. Regulators represent the public, more or less, and the public is rightly nervous about stewardship of its assets. Dual regulation offers refuge from the ancient fear of confiscation by the sovereign and is worth a certain amount of inefficiency if it works. But it does create loopholes, and it does impair transparency. In the case of the credit crunch of 2007, it sequestered bad debt in off-the-books ways, perhaps creating tax avoidance, but mainly creating distrust among counterparties. In those days of awful turmoil, no one knew what was going on, multi-billion dollar losses were being confessed by premier institutions, so transactions were delayed, avoided, or rejected. Transactions with anybody. When the time comes to reconsider regulations, it should be emphasized that by far the most damaging component of the whole mess was lack of transparency. Once more, a massive computer programming effort is entirely capable of restoring transparency to the existing regulatory structure, highly pigglety though it may be. After we achieve transparency we might consider achieving efficient transparency, and after that perhaps ponder fairness in transparency. When a trader calls another and asks to buy a zillion shares, the happy recipient of the call likes to glance up at his screen to see what the other fellow is worth, before he shouts, "You got it!"
What the Federal Reserve might well call the highest priority calls for respect, as well. Ever since we began the century-long transition from a gold standard for money, there has been a concern that the Fed might not be able to determine how much money, or credit, or liquidity -- is actually in existence. We have reached a point in this process where the Fed has largely stopped trying to measure monetary aggregates, and merely adjusts its tools to keep the money supply sailing between the rocks of inflation and recession; if neither rock is in sight, the amount of money is about right. That system has served us for eighteen years, long enough to spark hope that it can be permanent. But when a rocky shore does make an appearance, the Captain of the ship must know how much slack he has, and how reliable his sonar. For huge sums to be obscured within bank subsidiaries or delayed marking to market, is to increase the chance we will run up on the rocks when it might have been avoided. He too needs transparency, but he also needs prompt obedience to his orders. The rest of us passengers are rightly concerned when he appears before Congress and admits he is not sure what the situation is. As long as that is the case, fairness -- and dogma -- be damned.
Taking a step backward, the whole credit crunch has brought to the world's attention that real estate transactions are both immense, and immensely inefficient; a great deal of money is to be made if any step in the chain can be streamlined. Therefore, real estate agents, real estate lawyers, title insurance, surveyors, advertisers, inspectors and everyone else who makes a living from real estate sales -- can expect to be drawn into an annoying process of inspecting the premises, promises, kickbacks, referral fees and marketing costs of a whole expensive process, first blasted open to inspection by implementation defects while computerizing the mortgage step. It appears to be high time for it.
|Trimming the Hedge|
Some day a shrewd observer of the passing scene will notice the peculiar quality which attracts some businesses to the state of Delaware and coin a catchy phrase like Delaware Attractiveness to describe it in a nutshell. It surely underlies the way major national corporations predominantly incorporate under the laws of Delaware; other states don't like that. It probably accounts for the unusual accumulation of national credit card companies in that little state. Right now, it must be surmised to account for 24% of American hedge funds locating in Delaware. Just what is Delaware Attractiveness?
James Madison, the main author of our national Constitution, disliked taxes and debt and celebrated the ability of taxpayers to move to a different state if their home state raised taxes too high. The right to migrate away acts a discipline on state governments tempted to abuse power. A good example now exists in New Jersey, where one percent of the population pays 42% of the taxes, and that one percent is moving out of New Jersey as fast as it can. Eventually, that same 42% of taxes will be redistributed to those who remain, and something will be done about New Jersey state expenditures.
So conversely, little Delaware once had few corporations and little to lose by lowering corporate taxes. Soon, these low taxes attracted corporations from other states to incorporate in Delaware. When credit cards were invented, they were attracted to Delaware by low taxes, gentle regulation, and fair-minded courts. They were non-polluting businesses who employed a lot of rural labor made available by enhancements in agricultural productivity. One member of the Delaware Chamber of Commerce once mused, if it would attract the right sort of business, any hampering state legislation could be changed over a weekend.
This spirit of the American Liechtenstein attracted 24% of hedge funds to Delaware before most people knew what a hedge fund is. Without delving into the full complexity of the subject, a hedge fund addresses the instability of investing for the long term with short term money. Promising higher returns than mutual funds which can generally be liquidated overnight, a hedge fund locks the investor's money up for several years and hence needs to tell its competitors (and unfortunately also the investor) comparatively little about what it is doing with his money. One hedge fund operator stoutly defended the need to keep others from knowing his positions, illustrating how competitors who knew his positions would destroy him by "front-running", typically by flooding his positions with sell orders about ten minutes before or after the closing bell on the stock market. And, indeed that was a realistic concern since 70% of current stock trading is performed by unattended computers, who can transact huge sales in seconds when they detect unusual patterns of activity. So, when the stock market crashed in 2007-2009, Congressmen were pressured to find scapegoats. Some blamed computerized trading, and some blamed hedge funds. Quite possibly, it was neither one, since hedge funds were comparatively unaffected by the crash, and "programmed" traders made a great deal of money. However, Delaware is discovering that anyone who visibly escapes a nation-wide panic is under suspicion of causing it, and must fight off hostile legislation at least until the full facts emerge. The ability to front-run, and the ability to avoid having it happen to you, constitute a business advantage, an "edge". There may be more to it than that, but other features are cloaked in the secrecy which hedge funds enjoy, so secrecy is the business plan of hedge funds, apparently more tolerantly treated in Delaware than elsewhere. The price which hedge funds pay for their right to secrecy is the limitation imposed on them by the regulators as to who may be their customers. Therefore, an acceptable hedge-fund customer gets defined as a rich sophisticated person, who knows what risks are involved, and can afford to lose his money. Being in a small, closely-knit community where word of mouth is trusted, adds some degree of safety too. Adlai Stevenson once made an observation about trusting such protections:
In the past it was said, a fool and his money are soon parted. But nowadays -- it could happen to anyone.
The Right Angle Club was recently fascinated to hear Greg Harvey, a Montgomery McCracken expert on election laws, discuss the snarled Florida situation in the 2000 Presidential race, and the prospects for similar problems in upcoming elections. With the aid of retrospect, candidate Al Gore deserves much of the blame for his own loss, and the U.S. Supreme Court does seem to have terminated the uproar without affecting the final result.
A consortium of major newspapers funded an extensive investigation of the Florida election and were forced to agree that George W. Bush would probably have won that election no matter what. The central issue in these contests is the 35-day time limit to contesting elections. It is true that right or wrong, the country needs to settle its elections promptly and get on with its business. Furthermore, if a national election is so close that it takes months to decide the winner, there can't be a great deal of difference between the candidates, so who cares.
Looking back at the 2000 election with the leisure of time and appreciable resources, it is possible to see that Al Gore might have won that election if he had made several lucky choices in contesting its result. But it seems highly unlikely that anyone in his position would have been able to identify the winning combination of choices -- within the 35 day time allowed for pursuing them. He had to guess that ballots with two candidates marked ("over balloting") would pick up more Gore votes than ballots without an indicated choice ("under balloting"); he guessed wrong. He had to decide whether challenging late ballots from absentee military was worth the unpopularity of pursuing such a technicality to the disadvantage of soldiers serving overseas. His ticket-mate Joe Lieberman urged him to avoid that touchy issue which did prove to cost him some votes he needed. The decision was one to be proud of but is the main reason why his party faithfuls later turned rather viciously against Lieberman. A second wrong guess was to fail to go after the software mixup on invalidating the ballots of convicted felons. He might have picked up a couple of thousand votes, but only if willing to have the world learn that convicted felons are overwhelmingly pro-Democratic voters. The one decision he made that makes him look rather sappy to professional pols was to challenge ballots in the districts where he was already very popular.
Vote counters and poll watchers tend to be strong political partisans, usually drawn from the local district. When votes are ambiguous, these people lean in the direction of their party. Therefore, most party insiders would know immediately; if you challenge districts, challenge the districts which favor your opponent. Choices like this do have to be made. The thirty-five-day rule makes a challenger run out of enough time to look elsewhere if early guesses prove wrong. So, although it is possible in retrospect to construct for Gore a winning strategy for selective challenges, the newspaper consortium and the Supreme Court which pondered the choices before him rightly concluded he was destined to lose.
Some of these lessons are enduring ones, but future elections face unexplored difficulties. A new election law (the Help America Vote Act, or "HAVA") sought to reform the election system by prohibiting the use of punch card ballots, requiring states to use auditable vote records and provisional ballots in doubtful cases, stricter voter identification methods, and statewide voter registration databases. In response to these record requirements, many states opted for complicated data in code, sequence-scrambled to prevent individual identification. In the event of a challenge, however, deciphering these records will be time-consuming, and the potential is created for the candidate who is initially ahead to stretch out the process until the challenge effort collapses at the 35-day time limit.
Several states, including Ohio, are thought to have the potential for very close 2008 results. In that particular state there are some complicated rules about voting in the "wrong" district, that is, to be registered in one district, but attempting to vote in another. It would not seem difficult to do a little of this on purpose, either as a voter, or an election registrar. It seems unlikely that very much challenge among the three possible culprits could be accomplished within thirty-five days of a contested election. So the challenger in Ohio would be faced with the same sort of impossible snap decisions that faced poor old Al Gore, surrounded by excited partisans shouting at the top of their voices.
So perhaps Greg Harvey's law school classmate Appellate Judge Richard Posner has a sustainable position on this. It was his judgment that the 2000 election was essentially a tie. Letting the Supreme Court decide it wasn't the worst possible choice.
GEORGE Washington was a far more complex person than most people suppose, and he wanted it that way. He was born to be a tall imposing athlete, eventually a bold and dashing soldier. On top of that framework, he carefully constructed a public image of himself as aloof, selfless, inflexibly committed to keeping his word. Parson Weems the biographer may have overdone the image a little, but Washington gave Weems plenty to work with and undoubtedly would have enjoyed overhearing the stories of the cherry tree and tossing the coin across an impossibly wide Potomac. Washington had a bad temper and could remember a grievance for life. He married up, to the richest woman in Virginia.
Growing up along the wide Potomac River, Washington early conceived a life-long ambition to convert the Potomac into America's main highway to the Mississippi. He did indeed live to watch the nation's new capital start to move into the Potomac swamps across from his Mount Vernon mansion, in a city named for him. For now, retiring from military command with great fanfare and farewells after the Revolution, he returned to private life on this Virginia farm. He made an important political mistake along this path, by vowing in public never to return to public life. During the years after the Revolution but before the new Constitution, his attention quickly returned to building canals along the Potomac River, deepening it for transportation, and connecting its headwaters over a portage in Pennsylvania to the headwaters of the Monongahela River -- hence to the Ohio, then the Mississippi, or up the Allegheny River to the Great Lakes. He personally owned 40,000 acres along this river path to the center of North America. The occasion for a national constitutional convention grew out of a meeting with Maryland to reach an agreement about this Potomac vision, which was being blocked by commercial interests in Baltimore. Ultimately, Baltimore won the commercial race; so it was the Baltimore and Ohio Railroad which captured the early commerce to the west. Washington also made deals, ultimately to Baltimore's benefit, with the James River interests, to give them a share of the development of the Chesapeake Bay trade. As a young man, George Washington had acted as a surveyor for most of this region, and as a young soldier had explored the Indian trade to Pittsburgh, actually starting the French and Indian War during this trip. He was to march it again later with Braddock's army. All the while, Washington dreamed of the day. There were competitors; Philadelphia and New York had similar aspirations for their rivers. Take a look at a globe or Google Earth. Comparatively few of the earth's rivers drain too far western beaches. Even today, long-term victory in worldwide water transportation will likely go to one of many eastern rivers linking up with one of the few western ones. The ultimate world-wide goal has yet to be fulfilled for what continues to be the cheapest of all bulk transportation methods.
Washington at age 54 was already richer than most people need to be; a lot of this Potomac dream was a residual of boyhood ambitions enduring into middle age. In a sense, he had the ambition to make his boyhood home the future center of the universe. Although much of his stock in these real estate enterprises resulted in very little extra wealth, he demonstrated his mixture of public spirit combined with ambition by donating the stock in one of the companies to a future national university, to be located across the river near Georgetown. Since that didn't work out, he later placed the nation's capital there. He had consistently been a far bolder dreamer than Cincinnatus, humble Roman citizen-soldier returning to his farm from the wars.
Washington more or less gave up this Potomac ambition for a loftier one. During the Revolution, he had suffered the most infuriating abuse of himself and his soldiers from the state legislatures. Their urgent demands for victories were seldom matched with resources. The Continental Congress representing those state governments in a weak confederation that could not feed and pay its own troops seemed little better. He could be a mean man to cross, but perhaps with General Cromwell in mind, Washington possessed the firmest and most sincere belief in the proper subservience of military to civilian control. These conflicting feelings resulted in earnest obedience to a group of politicians he surely distrusted. This could not be described as hypocrisy; he respected their rank even though he suffered from their behavior. When Congress paid the troops in worthless currency which they promised to redeem after the war, it became clear that either lack of moral fiber or their system of governance led the states and the Congress in the direction of dishonoring their debt to the soldiers. This was a dreadful system, which led to death and suffering among the loyal troops, forcing the General into the humiliating position of assuring the troops Congress would stand by them, while he privately doubted any chance of it. Washington did not easily forgive or forget. Here was a paltry outcome for eight years of war and suffering; this system of organized dishonor must be improved.
He went about achieving his goal in a way that would not occur to most people. He chose a young ambitious agent, James Madison, who had caught his attention in the Virginia legislature, in the Continental Congress, and in the negotiations with Maryland over the development of the Potomac. Washington schemed with the young man for weeks on end about ways and means, opportunities, dangers, and potential enemies. Perhaps he failed to notice some ways where he and Madison fundamentally differed. Madison himself might not have recognized that his years at Princeton in the Quaker state of New Jersey had exposed him to novel ideas like separation of church and state, which were instantly appealing to the two Virginia Episcopalian religious doubters. Many people he admired, Patrick Henry, in particular, wanted the government to be as weak and ineffective as possible. Unfortunately, when Madison's turn later came for assuming the Presidency, he went along with reliance on diplomacy and persuasion until it almost cost America the War of 1812. Acting as Washington's agent in 1788, Madison was assigned to win over the Virginia legislature, make alliances with other states in Congress, identify friends and enemies, make deals. He performed as brilliantly as he would at the Constitutional Convention, so the basic conflict between the soldier President and his politician assistant was glossed over. As long as the original relationship held together, Washington felt it was useful to remain above and aloof, publicly wavering whether this was all a good idea, but fiercely determined to have a nation he could be proud of. There was to be a Constitutional Convention in Philadelphia, but while Washington was invited, he let it be known he was uncertain whether he should accept the invitation. What he really meant was he would preserve his political credibility for a different approach if this one failed. Considered from Madison's viewpoint however, this clearly meant Washington would dump him if things went badly. Meanwhile, the unknown young Madison on several occasions came to Mount Vernon for three days at a time to talk strategy and give the famous General all the scoop. Today, we would describe Madison as a nerd. The aristocratic Gouverneur Morris never thought much of him. Washington needed him, but there is no evidence he thought of him other than as a glorified butler. Little Madison was awkward among the ladies, a problem inconceivable to either Washington or Morris. But that little mind was surely working, all the time.
Madison was in fact a brilliant politician, a dissembler in a different way, but a severe contrast with his mentor. To begin with, he was a scholar. Both as an undergraduate at Princeton and a graduate student working directly with the great Witherspoon himself, Madison was deeply learned in the history of classical republics. He spent an extra year at Princeton, just to be able to study ancient Hebrew with Witherspoon. But he was innately skilled in the darker arts of politics. When votes were needed, he had a way of persuading three or four other members to vote for a measure, while Madison himself would then vote against it to preserve influence with opponents for later skirmishes. In fact, as matters later turned out, it becomes a little uncertain just how convinced Madison was that Washington's strong central government was a totally good idea. Before and after 1787 Madison expressed a conviction that real sovereignty originated in the states, just as the Articles declared. That was a little too fancy for practical men of affairs, who were uncomfortable to discover how literal Madison was after his break with the Federalists. Twenty years younger than the General. he prospered in the image of being personally close to the titan, and he certainly enjoyed the game of politics. The new Constitution was going to be an improvement over the Articles of Confederation, but Madison did not burn for long with indignation about injustice to the troops, or disdain for nasty little politicians in the state legislatures. These were problems to be solved, not offenses to be punished. The new Constitution was a project where he could advance his career, skillfully demonstrating his prowess at negotiation and manipulation. This is not to say he did not believe in his project, but rather to suspect that he was a blank slate on which he allowed Washington to write, and later allowed others to over-write. He was eventually to modify his opinions as a result of new associations and partners, and since he succeeded Jefferson as President, it was personally useful to adjust his viewpoints to his timing. What would never change was that he was an artful politician, while Washington hated, absolutely hated, partisan politics.
This is not just an emotional division between two particular Virginia plantation owners, but an enduring thread running through all elective politics. Washington set the style for generations of citizen leaders in America. In his mind, a person of honor distinguishes himself in some way before he enters public office, so on the basis of that honorable image, presents himself to voters for public office, and naturally is elected to represent their interests. He is expected to compromise where compromise is honorable and publicly acknowledged, in order to achieve one desirable outcome in concert with other outcomes, in some ways inconsistent but still honorable in combination. He reliably will not vote for either issues or candidates in return for some personal consideration other than the worth of the issue or the candidate, with the possible exception of yielding to the clear preferences of his local district. Such a person is not a member of a political organization very long before he encounters another group of colleagues -- who regularly swap votes for personal advantage, join a group who agree to vote as a unit no matter what the merits, and recognize the frequent necessity to talk one way while secretly voting another. The first sort of politician is usually an amateur, the second type is typically a professional politician. Although it seems a violation of ethics and common public welfare, the fact is the professional vote-swapper almost always beats the sappy amateur. The response during the Eighteenth Century was for idealists to condemn and attempt to abolish partisanship and political parties. The American Constitution does not make provision for political parties and other forms of vote-swapping or even anticipate their emergence. Although Madison ignited the process in the United States, Jefferson really organized it; every recent politician except Adlai Stevenson has openly participated in a version of it. That the Constitution has still not been amended to provide for parties seems to reflect a persisting nostalgic hope that somehow we can return to Washington's stance.
Washington's conception of open representative politics was not entirely perfect, either. In order to maintain an image of impartiality, Washington and his imitators isolated themselves in a cloak, holding back their true opinions in a sphinx-like way that hampered negotiation. Unwillingness to be seen swapping votes can lead to an unwillingness to compromise, and in the final analysis, the difference is one of degree. However, the over-riding issue is that each representative or Senator is equal to every other one. When vote-swapping gets started, it leads to placing power over supposed equals in the hands of the more powerful manipulators, masquerading as political leaders. Ultimately, it leads to the adoption of house rules on the very first day of a session which force lesser members to surrender their votes to a speaker or minority leader or committee chairman, when the theory is that there is no such thing as a lesser member. The claim of a party-line politician is that he obeys the will of the party caucus; the reality is usually that he obeys the will of some tough, self-advancing party leader. The final reality is that most legislatures must now deal with thousands of bills per session, leading to the necessity of appointing someone to set priorities, which in turn leads to the power of party leaders over their grudging servants. These various subversions of the equal rights of elected representatives can lead to such discrediting of the system that honorable people may refuse to stand for office, leaving foxes in charge of the hen house. Benjamin Franklin, who was to play an invisibly controlling role in the impending Constitutional Convention, had his own way of coping with the political environment. "Never ask, never refuse, never resign."
|The Convention and the Continent|
THE prevailing notion of the Constitutional Convention once depicted James Madison as seized with the idea of a merger of former colonies into a nation, subsequently selling that concept to George Washington. The General, by this account, was known to be humiliated by the way the Continental Congress mistreated his troops with worthless pay. But recent scholarship emphasizes that Washington noticed Madison in Congress becoming impassioned for raising taxes to pay the troops, was pleased, and reached out to the younger man as his agent. Madison seemed a skillful legislator; many other patriots had been disappointed with the government they had sacrificed to create, but Madison actually led protests within Congress itself. A full generation younger than the General and not at all charismatic, Madison's political effectiveness particularly attracted Washington's attention to him as a skillful manager of committees and legislatures. Washington was upset by Shay's Rebellion in western Massachusetts, which threatened to topple the Massachusetts government, but Shay's frontier disorder was only one example of general restlessness. There was a long background of repeated Indian rebellions in the southern region between Tennessee and Florida, coupled with uneasiness about what France and England were still planning to do to each other in North America. It looked to Washington as though the Articles of Confederation had left the new nation unable to maintain order along thousands of miles of the western frontier. The British clearly seemed reluctant to give up their frontier forts as agreed by the Treaty of Paris, and very likely they were arming and agitating their former Indian allies. Innately rebellious Scotch-Irish, the dominant new settlers of the frontier, were threatening to set up their own government if the American one was too feeble to defend them from the Indians. The Indians for their part were coming to recognize that the former colonies were too weak to keep their promises. With the American Army scattered and nursing its grievances, the sacrifices of eight years of war looked to be in peril.
The Union is much older than the Constitution. It was formed, in fact, by the Articles of Association in 1774. It was matured and continued by the Declaration of Independence in 1776. It was further matured ... by the Articles of Confederation in 1778. And finally, in 1787, one of the declared objects for ordaining and establishing the Constitution was "to form a more perfect Union.
|A.Lincoln, First Inaugural|
Even Washington's loyal friends were getting out of hand; Alexander Hamilton and Robert Morris had cooked up the Newburgh cabal, hoping to provoke a military coup -- and a monarchy. Because they surely wanted Washington to be the new King, he could not exactly hate them for it. But it was not at all what he had in mind, and they were too prominent to be ignored. So he had to turn away from his closest advisers toward someone of ability but less stature and thus more likely to be obedient. It alarmed Washington that republican government might be discredited, leaving only a choice between a King and anarchy. Particularly when he reviewed shabby behavior becoming characteristic of state legislatures, something had to be done about a system which proclaimed states to be the ultimate source of sovereignty. Washington decided to get matters started, using Madison as his agent. If things went badly he could save his own prestige for other proposals, and Madison could scarcely defy him as Hamilton surely would. Washington could not afford to lose the support of the two Morrises, and still, expect to accomplish anything major. Madison had been to college and could fill in some of the details; Washington merely knew he wanted a stable government and he did not, he definitely did not, want a king. Many have since asked why he renounced being King so violently; it seems likely he was projecting a public rejection of the Hamilton/Morris concept in a way that did not attack them for proposing it. It was a somewhat awkward maneuver, and to some degree, it backfired and trapped him. But Madison proved a good choice for the role, and things worked out reasonably well for the first few years.
The powers delegated by the proposed Constitution to the Federal Government are few and defined. Those which are to remain in the State Governments are numerous and indefinite.
Madison was young, vigorous and effective; he held the widespread perception of the Articles of Confederation as the source of the difficulty, and he was a reasonably close neighbor. He was active in Virginia politics at a time when Virginia held defensible claims to what would eventually become nine states. Negotiations for the Northwest Ordinance of 1787 would be going on while the Constitutional Convention was in session, and Virginia was central to both discussions. After conversations at Mount Vernon, a plan was devised and put into action. Washington wanted a central government, strong enough to energize the new nation, but stopping short of a monarchy or military dictatorship. There were other things to expect from a good central government, but it was not initially useful to provoke quarrels. Madison had read many books, knew about details. Between them, these two friendly schemers narrowly convinced the country to go along. As things turned out, issues set aside for later eventually destroyed the friendship between Washington and Madison. Worse still, after seventy years the poorly resolved conflict between national unity and local independence provoked a civil war. Even for a century after that, periodic re-argument of which powers needed to revert to the states, which ones needed to migrate further toward central control, continued to roil a deliberately divided governance.
For immediate purposes, the central problem for the Virginia collaborators was to persuade thirteen state legislatures to give up power for the common good. The Articles of Confederation required unanimous consent of the states for amendment. To pay lip-service to this obstacle, it would be useful to convene a small Constitutional Convention of newly-selected but eminent delegates, rather than face dozens of amendments tip-toeing through the Articles of Confederation, avoiding innumerable traps set by the more numerous Legislatures. In writing the Articles of Confederation, John Dickinson had been a loyal, skillful lawyer acting for his clients. They said Make it Perpetual, and he nearly succeeded. The chosen approach to modification was first to empower eminent leaders without political ambitions and thus, more willing to consent to the loss of power at a local level. Eventual ratification of the final result by the legislatures was definitely unavoidable, but to seek that consent at the end of a process was far preferable because the conciliations could be offered alongside the bitter pills. Divided and quarrelsome states would be at a disadvantage in resisting a finished document which had already anticipated and defused legitimate objections and was the handiwork of a blue-ribbon convention of prominent citizens and heroes. By this strategy, Washington and Madison took advantage of the sad fact that legislatures revert toward mediocrity, as eminent citizens experience its monotonous routine and decline to participate further in it, but will make the required effort for briefly glamorous adventures. Eminently successful citizens are somewhat over-qualified for the job, whose difficulties lesser time-servers are therefore motivated to exaggerate. To use modern parlance, framing the debate sometimes requires changing the debaters. In fact, although he had mainly initiated the movement, Washington refused to participate or endorse it publicly until he was confident the convention would be composed of the most prominent men of the nation. This venture had to be successful, or else he would save his prestige for something with more promise. Making it all work was a task for Madison and Hamilton, who would be replaced if it failed.
While details were better left hazy, the broad outline of a new proposal had to appeal to almost everyone. Since the new Constitution was intended to shift power from the states to the national government, it was vital for voting power in the national legislature to reflect districts of equal population size, selected directly by popular elections. That was what the Articles of Confederation prescribed. But no appointments by state legislatures, please. In the convention, it became evident that small states would fear being controlled by large ones through almost any arrangement at all. On the other hand, small states were particularly anxious to be defended by a strong national army and navy, which requires a large population size. England, France, and Spain were stated to be the main fear, but small states feared big neighboring states, too. Since the Constitutional convention voted as states, small states were already in the strongest voting position they could ever expect, particularly since the Federalists at the convention needed their votes. Eventually, the agreement was found for the bicameral compromise suggested by John Dickinson of Delaware, which consisted of a Senate selected and presumably voting as states, and a House of Representatives elected in proportion to population; with all bills requiring the concurrence of both houses. From the perspective of two centuries later, we can see that allowing state legislatures to redraw congressional districts gives them the power to "Gerrymander" their election outcomes and hence restores to the populous states some of the internal Congressional power Washington and Madison were trying to take away from them. In the 21st Century, New Jersey is an example among a number of states where it can fairly be said that the decennial redistricting of congressional borders accurately predicts the congressional elections for the following ten years. The congressional seniority system then solidifies the power of local political machines over the core of Congressional politics. However, the irony emerges that Gerrymandering is impossible in the Senate, and hence legislature control over their U.S. Senators has been weak ever since the 17th Amendment established senatorial election by popular vote. That's eventually the opposite of the result originally conceded by the Constitutional Convention, but possibly in accord with the wishes of the Federalists who dominated it.
|Electoral College Method for Election of the President|
This evolving arrangement of the national legislative bodies seemed in 1787 an improvement over the system for state legislatures because the Federalists believed larger legislatures would contain less corruption because they had more competing for special interests to complain about it. There were skeptics then as now, who wished to weaken the tyranny of the majority so evident in the large states and in the British parliament. To satisfy them, power was redistributed to the executive and judicial branches, which were intentionally selected differently. Here arises the source of the Electoral College for the election of the President. It gives greater weight to small states (and provokes a ruckus among large states whenever the national popular vote is close). Further balance in the bargaining was sought by lifetime appointments to the Judiciary, following selection by the President with the concurrence of the Senate. Without any anticipation in this early bargaining, an unexpectedly large executive bureaucracy promptly flourished under the control of the chief executive, lacking the republicanism so fervently sought by the founders everywhere else. This may be in harmony with the Federalist goal of removing patronage from legislature control, but Appropriations Committee chairmen have since found unofficial ways to assert pressure on the bureaucracy. It's quite an unbalanced expedient. Only in the case of the Defense Department is the balancing will of the Constitutional Convention made clear: the President is commander in chief, only Congress can declare war. Although this difficult process was meant to discourage wars, it mainly discouraged the declaration of wars; other evasions emerged. From placing the command under an elected President, emerges a stronger implicit emphasis on civilian control of the military, loosely linked to the fairly meaningless legislative approval of initiating warfare. There have been more armed conflicts than "declarations" of war, but no one can say how many there might otherwise have been. And there have been no examples of a Congress rejecting a President's urging for war.
And that's about it for what we might call the first phase of the Constitution or the Articles. In 1787 there arose a prevalent feeling that national laws should pre-empt state laws. In view of the need to get state legislatures to ratify the document however, this was withdrawn. The Constitution was designed to take as much power away from the states as could be taken without provoking them into refusing to ratify it. Since ratification did barely squeak through after huge exertions by the Federalists, the Constitution closely approaches the tolerable limit, and cannot be criticized for going any further. Since no other voluntary federation has gone even this far in the subsequent two hundred years, the margin between what is workable and what is achievable must be very narrow. Notice, however, the considerable difference between Congress having the power to overrule any state law, and declaring that any state law which conflicts with Federal law is invalid.
The details of this government structure were spelled out in detail in Sections I through IV. However, just to be sure, Section VI sums it all up in trenchant prose:
This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding. The Senators and Representatives before mentioned, and the members of the several state legislatures, and all executive and judicial officers, both of the United States and of the several states, shall be bound by oath or affirmation, to support this Constitution; but no religious test shall ever be required as a qualification to any office or public trust under the United States.
Except for some housekeeping details, the structural Constitution ends here and can still be admired as sparse and concise. That final phrase about religious tests for office sounds like a strange afterthought, but in fact, its position and lack of any possible ambiguity serve to remind the nation of grim experience that only religion has caused more problems than factionalism. Madison was particularly strong on this point, having in mind the undue influence the Anglican Church exerted as the established religion of Virginia. There are no qualifications; religion is not to have any part of government power or policy. By tradition, symbolism has not been prohibited. But government as an extension of religion is emphatically excluded, as is religion as an agency of government. Many failures of governments, past and present, can be traced to an irresolution to summon up this degree of emphasis about a principle too absolute to tolerate wordiness.
|George Washington Taking Oath|
On the eve of the Constitutional Convention, the nation was unhappy, confused, and dissatisfied; this wasn't what a victory was supposed to feel like. George Washington wanted a country to be proud of, big enough to discourage enemies, otherwise free of policing, regulation, or monarchy. Eight years of war had taught him it wasn't easy to have both liberty and discipline at the same time. Perhaps America was more unusually blessed, however, defended from invasion by oceans and wilderness, and from greed by a continent of natural resources. If order and justice could be organized, perhaps this by itself would enlist the loyalty of that mixture of classes and nationalities then flocking to our shores. Several important writers were having a strong influence on the era we now call the Enlightenment; David Hume and Adam Smith in Scotland, Edward Gibbon in England, Voltaire and Diderot in France, even Catherine the Great of Russia, with a thousand others including Benjamin Franklin and Robert Morris. Although Washington probably hadn't read them, Adam Smith's The Wealth of Nations showed unvarnished new ways of looking at commerce and politics, while Gibbon's The Decline and Fall of the Roman Empire showed what could happen if idealism gets neglected. Both books were published in the portentous year of 1776, describing many difficulties, but always suggesting problems could somehow be solved. There were plenty of ideas in circulation, but there was no plan.
It must have become obvious to Washington well before the Battle of Yorktown, that the Revolutionary War would not leave us with our problems solved. There was one brief moment as the British Army was withdrawing from Philadelphia in 1778 which seemingly justified boasts our troops had licked 'em. Just after the surrender of a whole British Army at the Battle of Saratoga, the British were also retreating from Philadelphia, and the Lord North offered generous peace terms through the Earl of Carlisle. No doubt the British public was restless after the Burgoyne defeat and the French alliance with America. Because the Carlisle episode is much more familiar in England than in America, perhaps it was a feint or a maneuver to embarrass the Earl of Carlisle or possibly just an exploration of the true state of affairs which were rumored about across a wide ocean. At any event, Gouverneur Morris was the visible American actor in this puzzling episode, but he must have been acting in concert with others. Lord North offered to give us our own elected parliament within a commonwealth; taxation with representation, no less. Morris seems to have dismissed this offer with contempt. But six more years of devastation ensued, surely convincing Washington that bitter defeat was still possible. That reality was concealed behind the graciousness of the French in allowing us to claim American troops had defeated the British at Yorktown. In fact, the preponderance of troop casualties, naval vessels and strategy had been French. The money had been mostly French as well. If that debt nearly bankrupted France, what might it have done to America?
Washington had been an outstanding athlete, soldier, and farmer, but his many travels about the colonies convinced him something more than leadership was needed. And even warned him more was needed than a confederation so big others would leave it alone. National disorganization was just as bad after the Revolution as before. By 1787, Washington concluded the states just would not surrender power to a central national government unless the people forced them to give it up. Dire military predicaments were not guaranteed to transform flight into resolution. Peacetime also demonstrated another discouraging truth: meaningful improvement of the existing order meant the whole previous leadership class could be out of a job watching others make a batch of it because unfortunately, peace attracts mediocrity to political office. Prominent men in the community gathered in a Constitutional Convention recognized the advantages of Union and peaceful ways to maintain it. But after that transient moment when the memory of the war was fresh, politics could return to the mediocrities of a political class. That's not exactly what is now meant by "We, the People", but it might have to serve. In Washington's view, the voice of the people usually echoed along the lines of Tell us what good it would do to upset the Articles of Confederation, otherwise leave them alone. If you propose the general shape of a new central government, first tell us what it can do better than the states. And then show us how to make dubious state politicians agree to it. The accents of hesitation and defeat echo.
The hideous French Revolution was soon to demonstrate how unwise it was to look for short-cuts; we needed a republic, not a stampeded democracy. George Washington was unsure just what was needed, but he knew a few basic things with certainty. America needed a bargain which everyone was expected to keep. An amendment should be provided for, but make it difficult.
There are certainly a lot of Ingersolls in Philadelphia. A lot of Jared Ingersolls, a lot of Charles Ingersolls, and even a lot of Charles Jared Ingersolls. At a dinner party, a lady whose maiden name is Ingersoll was asked about Charles Ingersoll, and was forced to say, "Just how old would you say he is?"
|Jared Ingersoll, Jr.,|
The one we are talking about here is Jared Ingersoll, Jr., the son of a Tory who had once been tarred and feathered by Revolutionaries in New Haven. Young Jared was in England at the Inns of Court when the Declaration was signed, became a fervent Revolutionary, and represented Pennsylvania at the Constitutional Convention. It was thus difficult to predict where his sympathies would lie in the settling of debts and grievances associated with the Revolutionary War; in fact, he might be as impartial as any lawyer to be found at the time. At their best, all lawyers reach for the peaceful settlement of grievances, serving their clients best by finding a solution that puts an end to reprisals. Furthermore, he had had excellent legal training, something which could not be said of most apprentice-trained lawyers of that time, and had faithfully attended every single session of the Continental Congress, while commenting very little about his own views. The first ten amendments are the Bill of Rights which had been promised during the ratification process, so the Eleventh became the first real amendment, in the sense that it specifically reverses some feature of the original design. To present observers it may not be easy to surmise just what the purpose might have been to outlaw the method which had been established for an injured citizen to sue a state. To be blunt about this point, the colonists wanted to welch on paying debts to Loyalists and Englishmen, those hated enemies, without admitting this was their motive. The spin they put on this shabby attitude was that states were now sovereign entities without a king, and since historically a British king could not be sued without his consent, therefore neither could the states. Probably the best that can be said for this cloud of words is the point that suing the government should not be made too easy, for fear of overwhelming the court system with endless clamor. The historical episode surrounding the Eleventh Amendment is an important one in our national struggle to balance the accusations of hypocrisy and chiseling, with the opposite tendency of slavish adherence to procedure, or "due process".
Ingersoll had attended the Constitutional Convention as part of the most influential state delegation of insiders and was set up to practice law in the capital city of Philadelphia just a few blocks from the heart of government. A case came up. The estate of Captain Robert Farquhar, an Englishman, was owed $169,613.33 for "goods" sold in 1777 to agents of the embattled State of Georgia during the Revolution. The executor of Farquhar's estate, a resident of South Carolina named Alexander Chisholm, then sued the state of Georgia after the war was over for that state's extinguishing the debt by a statute passed after the contract. This had been the rather common treatment of Loyalist debts by other colonies and thus enlisted their sympathies to Georgia in this case. Furthermore, it was the sort of uncivil behavior that had enraged John Jay and George Washington, leading them to press for the Constitutional Convention. On the other hand, the new state governments were hard-pressed for cash and had to contend with highly combative citizens who resented even the suggestion that they play fair with people who had so recently been trying to kill them. Furthermore, it was entirely realistic for them to fear a flood of lawsuits from people they mercilessly pursued under what "everyone" considered the rebellion's accepted rules of engagement. It was thus clever for Georgia to seek the help of Ingersoll in appealing to the Supreme Court, and the previous tarring and feathering of his Loyalist father was not entirely irrelevant. Ingersoll, unfortunately, lost his case of Chisholm v Georgia when the Supreme Court (John Jay, CJ) declared that Chisholm was indeed entitled to sue the State of Georgia. It is hard to see how Ingersoll (and his colleague Alexander Dallas) could have won this case when the Constitution which he helped write plainly provided the rules for citizens of one state suing another state; it seems remotely possible that the officials of Georgia were attempting to shift the blame of an inevitable loss of he suit:
Article III - Section 2 -The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party; to Controversies between two or more States; between a State and Citizens of another State; between Citizens of different States; between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.
John Jay ultimately revealed the depth of his dismay at dishonoring debts when he negotiated Jay's Treaty during the Adams administration, providing for adjustment of such debts. Adams, in turn, was to reveal where his own sympathies lay by refusing to announce -- for three years -- the reversal of this position by the Eleventh Amendment, stirred up in his own state. Adams' rather flagrant abuse of a technicality might well have led to another constitutional amendment, except for the Supreme Court later ruling that official enactment of amendments did not require Presidential announcement, but took effect upon ratification by the required number of states.
Adams, in turn, had ample political problems in his home state of Massachusetts. John Hancock, then Governor, called a special session of the Massachusetts legislature to propose an amendment to reverse the Constitutional language on which the Supreme Court's decision had relied: It soon became clear, or perhaps Ingersoll was determined to make it seem clear, that Georgia had been smart to employ this political insider. Congress soon enacted, and the necessary states soon ratified the Eleventh Amendment. It stated that a citizen of another state may not sue a State government in Federal Court:
Amendment XI. The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
Later decisions included citizens of the same state, so in effect, this amendment stated that no one may sue a State Government unless the state agrees to be sued. That's essentially what is true of the federal government; the states were given the same sovereignty with all of its features, as the federal government and that was an intentional slap in the Federalist faces.
It sounds as though Jared Ingersoll might have been a states-righter, although nothing in his past or future behavior suggests that he was anything but an ardent Federalist. He was even proposed as vice presidential candidate for the Federalist Party. No one called him wishy-washy, or a traitor or a covert anti-federalist, and he never acted like one. He was just a lawyer with a client.
In some foreign countries, people who dislike the government about some issue wait for a clear day and go in the streets to riot. Some of our own younger people who spent a little too much time abroad have likewise occasionally called their friends on a cell phone and agreed to pour out into our town squares to protest. When you try that in Tienanmen Square (1989) or similar places, machine guns can suddenly end the meeting (2,500 dead). We had the Boston Massacre of 1770 (5 people killed) and Kent State of 1970 (4 people killed), where newsmedia somewhat over-dramatized the risk involved. In general, most Americans feel public demonstrations are neither very dangerous nor very useful.
|Chief Justice, John Marshall,|
One measure of Constitutional effectiveness can be found in just this public attitude. The citizenry has been told and generally believe that methods for addressing grievances have been provided in the legislative, judicial and executive branches, ultimately leading to the Constitution itself as the last point of appeal. The 1787 framers in Philadelphia probably had this design in mind, but it was not until the third Chief Justice, John Marshall, made it his life's work that the elegance of the system became widely appreciated. The Constitution is the capstone of our system; every citizen's grievance can be appealed within it. If things are sufficiently dire, even the Constitution can be changed.
|second Constitutional Convention|
A second Constitutional Convention could be called, but most lawyers shudder at what chaos might emerge from making multiple changes without waiting to see how a few worked out. For practical purposes, therefore, amending the Constitution is the last recourse when the government goes astray. Amendments don't easily succeed; hundreds were proposed in two hundred years but only two dozen were adopted. In totalitarian countries, millions of amendments might be envisioned, but either nothing significant would be adopted, or nothing significant would be enforced. In our country, it is sufficiently difficult to succeed that frivolous or ill-advised proposals are discarded or modified into less extreme forms by "due process". But enough amendments do succeed to keep the populace out of street protests. Amendments can succeed, if you and the proposal are really serious. So far the only real appeal beyond an amendment has been another amendment.
|Judge Benjamin Cardozo|
The step provided before an amendment is to appeal to the Supreme Court. That happens about a hundred times a year, with the generally satisfying outcome. Perhaps the only serious criticism of the Supreme Court is the difficulty of "gaining cert.", which is the process of petitioning the Court to take the case, by granting a writ of certiorari. Only about 2% of petitions are allowed to present their arguments, and the Court has protected itself from overwhelming volume by limiting its caseload to instances of conflicts between circuits, and cases involving sovereignty of some sort. For such a selective process to remain acceptable, implicitly the rulings of the various Circuit Courts of Appeal would also have to enjoy general approval. That such is the case is evidenced by the fame and distinction reached by certain Judges of Appeals Courts, like Benjamin Cardozo, Learned Hand, and Richard Posner. In Cardozo's case, he was finally appointed to the Supreme Court, but at such an advanced age and short tenure that his Supreme Court reputation is rather modest; he achieved his reputation as an Appellate Judge. The failure of Robert Bork and several others to achieve Senate ratification illustrates a somewhat different version of the same issue: that the higher courts, not just the Supreme Court, are generally held to do as good a job as human systems allow; supremely gifted judges are not exclusively in the Supreme Court. As you go lower in the court system, more dissatisfaction can be heard, ultimately reaching slander accompanied by knowing grins, such as "You show me a hundred thousand dollars, and I'll show you a Philadelphia judge." Whenever criminals meet justice, such mutterings can be expected. But the point to emphasize is that there are no muttered challenges to the contention that the higher you go in the Judiciary, the more distinguished the judge is likely to be.
That's the federal judiciary, of course. State judiciaries are held in less esteem, although they have the power to put people in jail forever, award multimillion-dollar verdicts and modify the climate of business. Somehow, the prestige of these judicial systems has eroded to the point where a joke can be heard that being a state supreme court justice is a pretty good way to start a law practice. It's hard to know whether prestige has disappeared because of performance, or the reverse. Whether the steady erosion of state legislative power by Congress has resulted in a parallel loss of status in the judiciary is a serious question. In that case, of course, there is very little the judiciary itself can do about it.
The Congress shall have power to .........Regulate Commerce with foreign nations, and among the several states, and with the Indian Tribes
just exactly as it did when for 150 years everyone referred to it as the Interstate Commerce Clause. What has changed is the declaration that Congress may regulate all commerce of any sort, without fear of challenge in the court system. Whatever chances Roosevelt might have had to amend the Interstate Commerce Clause before this uproar, it is clear he could never have achieved its amendment afterward.
The second instance of circumvention is related to the same episode. The insurance industry was highly displeased to find itself regulated by federal agencies, and within six weeks successfully lobbied the McCarran Ferguson Act into law. Congress could not overturn or make an exception to a Supreme Court ruling, but it accomplished the same result by prohibiting federal agencies from taking action in the business of insurance. To maintain regulation for insurance, all of the various states then passed laws establishing insurance regulatory mechanisms, and insurance regulation migrated back to the states. It is now difficult to know whether the same exception could have been created by then re-amending the Constitution. But since the advent of wide-spread current dissatisfaction with health insurance, it pretty clear that an amendment imitating McCarran Ferguson would never pass, today.
|John Jay the Chief Justice|
Finally, the Eleventh Amendment may not have been such a good idea, either. The dispute in 1793 (although it avoided saying so) was about compelling Americans to pay just debts regardless of the person they owed them to. And that included paying debts to former Loyalists. John Jay the Chief Justice was sent to England to negotiate a treaty to settle this matter, but after both nations ratified the treaty, state laws were passed to supersede it. From this evolved the issue of whether a treaty takes precedence over American laws, and the ensuing battle firmly established the preemption of Congress by treaties. Two hundred years later, when the British are our allies and Revolutionary debts fade in significance, many people are uneasy about such clear-cut deference to treaties. Our unwillingness to join the League of Nations, and sign the Kyoto Agreement, or enter into many other international cooperative ventures are related to uneasiness about the unintended expansive power inherent in the Constitutional location of a foreign treaty, enacted at a time of limited communication. We are doomed by demography to perpetual minority status in world forums but forced by economic success to exert leadership or become a target. There is no immediate emergency, but the prescribed generalities of enacting or enforcing treaties need sober reflection in the era of instant communication.
The Tenth and Eleventh Amendments are the high-water mark of state power in the American Republic. The main 1787 Constitution lists what the Federal organization might do and might not do, but it only lists a few other things the states may not do. By implication, the states could do everything else. But a great many promises had been made during the ratification campaign, some of them weakened by the atmosphere of salesmanship. The members of the First Congress convened the new government with a long list of hostile, suspicious proposals for amending what many of their constituents regarded as merely honeyed promises. In effect, the anti-federalists were demanding to "have it in writing". Under the circumstances, the most effective promise was one that was simple and short:
Amendment X 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
|The Tenth Amendment|
Americans are rightly proud of their Constitution, an achievement no one seems able to match. It's rude to point it out, but some Americans are just a little condescending about Europe's protracted examination of a federal union, and the World's plain inability to design a United Nations Charter that everyone can warm to.
|Charles de Gaulle|
But just a minute, look at the centuries of history we have compiled. After eighty years, the American union broke apart in the bloodiest war in our history, proportional to the population at the time. After another century it was safe to suppose we were past that episode, at least mostly.
And if you were an elected representative of one of the European states, charged with assuring a fair result for your constituents, you would have to warn them of something America seems to demonstrate. The new federal government at first had to be deferential to the various states, in order to persuade them to ratify the document. It wasn't an easy sell, and a promise had to be made and reiterated that every single power being surrendered was absolutely necessary for the common welfare of all. And it was necessary to repeat the promise in the Tenth Amendment, that nothing more was being given, nothing up our sleeve. The Eleventh Amendment which followed soon afterward could even be described as a test of sincerity. The states demanded something they really should have been ashamed to ask for, but it was given to them as a demonstration who was still boss. The Federalist party soon broke apart, and had to become craven, only persisting in the assertion of powers it was absolutely clear states needed to give up.
But soon after that, the federal government has never ceased to nibble away at the cheese. Step by step, gradually but relentlessly, power has shifted from state capitals to the District of Columbia. It is now possible to say without serious contradiction that state legislatures really don't have much to do of any importance. Is that the lesson European officials are learning from our history?
Maybe not, but Charles de Gaulle once made a wisecrack suggesting another answer. He wanted to go to Heaven, he said. He really did. But he was definitely in no hurry to get there.
|President George Washington|
"It is of infinite moment that you should properly estimate the immense value of your national union to your collective and individual happiness; that you should cherish a cordial, habitual and immovable attachment to it; accustoming yourselves to think and speak of it as of the palladium of your political safety and prosperity, watching for its preservation with jealous anxiety; discountenancing whatever may suggest even a suspicion that it can, in any event, be abandoned; and indignantly frowning upon the first dawning of any attempt to alienate any portion of our country from the rest, or to enfeeble the sacred ties which now link together the various parts."
|Dr. Randall Miller|
Dr. Randall Miller of St. Joseph's University recently gave the Union League an interesting insight into the non-military upheavals of America by Congress during the Civil War. (Parenthetically, Dr. Miller is the author of Encyclopedia of Greater Philadelphia, which may give him still greater prominence in these columns when it reaches print.) Lincoln and the military get most of the headlines, but the greatest nation-building activities were products of the Congress, not Abraham Lincoln directly; the President was too busy directing the war to take much lead in other matters. The Republican Party of that time was freshly created, still strong in its idealism around elements of the party platform which really meant something to them. Although Senators John Sherman of Ohio and William P. Fessenden of Maine are remembered by history, most of the activity was conducted by members of the Congress who had reached seniority in committees and hence mostly had died off by the end of the War. It seems like one of history's great unfairnesses that a remarkable transformation of the nation was accomplished by people who are now largely unknown.
So Lincoln gets much of the credit by default, and the idealism and grand plans are lost in the current view that the Civil War was about liberating the slaves. That was, of course, part of it, but the Civil War was in fact mostly fought about the Union, and the Whig principles essential to nation-building. And the transformation was the vision of party politicians in offices which we currently regard as being filled by party hacks in safe seats. That wasn't the case at all; these visionaries knew where they wanted the country to go, and cleverly designed a set of programs to make it happen. Lincoln wanted to win the war; these men wanted to have a new nation emerge, after the war.
It almost goes without saying that a Civil War over the secession of rebellious state governments from a Union created by the Constitution was going to weaken state power -- and strengthen Federal control -- if the Unionists won the war. That's what the Republicans wanted, and what the Southerners feared. But, strangely, both sides harbored warm feelings for the Constitution, wanting to preserve much of its essence. The Republicans, therefore, realized that many of the laws which were essential for winning the war, would lose their popularity and hence their force, once victory had been achieved. Reconstruction of the South, for example, was going to be unsustainable as soon as the huge Union Army was demobilized. The liberated slaves were unlikely to migrate to the western wilderness, and so the problems of racial readjustment were going to remain Southern problems for decades to come, without an army of occupation to maintain stability, law, and order. In fact, it was largely Southern whites who migrated to the far West, leaving the situation even more unstable back in the old Confederacy. How was a brave new nation to emerge from this mess?
War measures did help. There was no Federal currency until the War, and so a national system of greenbacks and war bonds helped to unify a vast and far-flung continent. The National Banks, fought over and feared for nearly a century, simply had to be created; all of these national rather than local symbols strengthened the national feeling. Putting 10% tax on state bonds was a pretty good indication that the congressional Republicans knew where they were driving things. The telegraph was of great value to wartime communication; it helped create a virtual community, with national news taking the place of local news.
Up until the Civil War, the main source of Federal income was derived from the sale of land; the new nation had a lot more land than gold. After the war, the nation found itself with taxation as the main source of income. The income tax was a step too far, of course, and it was repealed; but a system of national currency organized a system of national taxes which persisted. The country still had plenty of raw lands, but it was distributed by giving it to railroads in return for national transportation, and to land-grant colleges in return for greater uniformity of culture. Notice the hand of Congress, however. This land was to be surveyed land, not the land between this rock and that creek. Surveyors since the time of William Penn and George Washington were the agents of orderliness, law, and peaceful settlement of disputes. To that extent, surveyors broke up the reliance on local clans and territoriality; peace instead of conquest. The leaders of the North, the Republicans in Congress and the cabinet knew what they wanted; it was that the sacrifices of the war would find a reward in the peace that would follow and that reward would be a new nation.
Notice carefully the second section of the Thirteenth Amendment. The first section freed the slaves. The second section gave to the Federal government the charge of enforcing that liberty. The crafters of words and designers of rules, knew exactly where they wanted to go.
They did their work so well, that it begins to look as though the next few decades will display a crisis, created by going too far, too fast. In all these idealistic schemes, the state government is the enemy. State governments would interfere with Reconstruction; state governments would interfere with land grants and misuse their undisputed control of local law enforcement. State governments would introduce little strategies for restoring the power to tax and control, and to govern. State governments would slowly remember that the Constitution conferred only a few limited powers on the Federal government, and reserved all other powers to the states. The Constitution would never have achieved ratification without this explicit provision in the XII Amendment. And so, step by step, we have achieved some sort of goal by making the state governments into the weakest, most ineffectual, and yes the most corrupt parts of our national system. California, New York, New Jersey, and Michigan lead the way into what seems a certain disaster of enlisting municipal employees into political machines of the worst sort, and bankrupting the states that permit it. Massachusetts, Rhode Island, Maryland and West Virginia are not far behind.
Fanatics could persuade themselves that a solution readily lies in simply going all the way and eliminating state governments. But to do so would destroy James Madison's brilliant insight. The states place a limit on unlimited power from whatever source by offering the citizens a choice: if things get too bad, just move to a nearby state.
Amendment 1 Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble and to petition the government for a redress of grievances.
|The First Amendment|
Simplified histories of America often declare that other Western Hemisphere colonists mostly came to plunder and exploit; whereas English Protestant colonists came with families to settle, fleeing religious persecution. That's a considerable condensation of events covering three centuries, but it is true that before the Revolutionary War, eleven of the thirteen American colonies approximated the condition of having established religions. Massachusetts and Virginia, the earliest colonies, had by 1776 even reached the point of rebelliousness against their religious establishments. The three Quaker colonies (New Jersey, Pennsylvania, and Delaware) were late settlements, in existence less than a century before the Revolution, and still comfortable with the notion they were religious utopias. While differing in intensity all colonials respected the habits of thought and forms of speech, natural to utopians residing in a religious environment.
Once Martin Luther had let the Protestant genii out of its religious bottle, however, revisionist logic was pursued into its many corners. Ultimately, all Protestant questers found themselves confronting -- not religious dogmatism, but it's opposite -- the secularized eighteenth-century enlightenment. Comparatively few colonists were willing to acknowledge doubts openly about miracles and divinity. However, private doubts were sufficiently prevalent among colonial leaders to engender restlessness about the tyrannies and particularly the rigidities of the dominant religions. To this was added discomfort with self-serving political struggles observable among their preachers, and alarm about occasional wars and persecutions over arguably religious doctrines. Arriving quite late in this evolution of thought -- but not too late to experience a few bloody persecutions themselves -- the Quakers sought to purify their Utopia by eliminating preachers from their worship entirely. Thus, the most central and soon the most prosperous of the colonies made it respectable to criticize religious leaders in general for the many troubles it was believed they provoked.
|London Yearly Meeting|
In all wars, diplomatic arts and religious restraints get set aside as insufficient, if not altogether failures for an episode of utter barbarism. In the Revolution, some Quakers split from pacifism and became Free Quakers, many more drifted into Episcopalianism, never to return to pacifism. The Constitutional Convention of 1787 was eventually held in this persisting environment; the previous service in the War counted for something, and the great goal was to strengthen the central government -- for more effective regional defense. A great many leaders were Masons, holding that much can be accomplished by secular leadership, independent of religious reasonings. Neither Washington nor Madison revealed much of their religious positions, although Washington the church attender always declined communion; Franklin and probably Jefferson were at heart deists, believing that God might well exist, but had wound up the universe like a clock to let it run by itself. The New England Calvinist doctrines have since evolved as Unitarianism, which outsiders would say theologically is not greatly different from deism. Physically surrounding the Philadelphia convention was a predominantly Quaker attitude; entirely too often, preachers get you into trouble.
When the first Congress finally met under their new constitution, they immediately confronted over a hundred Constitutional amendments, mostly submitted from the frontier and fomented by Jefferson and Patrick Henry, demanding a bill of rights. The demand within these amendments was overwhelming that the newly-strengthened central government must not intrude into the rights of citizens. Recognizing the power of local community action, states rights must similarly be strengthened. Just where these rights came from was often couched in divine terms for lack of better proof that they were innate, or natural. From a modern perspective, these rights in fact often originated in what theologians call Enthusiasm; the belief that if enough people want something passionately enough, it must have a divine source. The newly minted politicians in the first Congress recognized something had to be done about this uproar. Congress formed a committee to consider matters and appointed as chairman -- James Madison. Obviously, the chief architect of the Constitution would not be thrilled to see his product twisted out of shape by a hundred amendments, but on the other hand, a man from Piedmont Virginia would be careful to placate the likes of Patrick Henry. The ultimate result was the Bill of Rights, and Madison packed considerably more than ten rights into the package, in order to preserve the cadence of the Ten Commandments. The First Amendment, for example, is really six rights, skillfully shaped together to sound more or less like one idea with illustrative examples. Overall freedom of thought comfortably might include freedom of speech (and the press), along with freedom of religion and assembly, and the right to petition for grievances. But what it actually says is that Congress shall not establish a national religion. Since eleven states really had approximated a single established religion, the clear intent was to prohibit a single national religion while tolerating unifications within the various states. Subsequent Supreme Courts have extended the Constitution to apply to the states as well, responding to a growing recognition that religious states had the potential to get so heated as to war with each other. No matter what their doctrines, it seemed wise to deprive organized religions of political power as a firm step toward giving the Constitution itself dominant power over the processes of political selection.
At first however it was pretty clear; one state's brand of religion was not to boss around the religion of another state. Eventually within one state, Virginia for example, the upstate Presbyterian ministers were not to push around the Episcopalian bishops of the Tidewater. Madison and Jefferson saw well enough where political uprisings tended to start in those days, in gathered church meetinghouses. In this way, an Amendment originally promoted to protect religions had evolved into a way to ease them out of political power. The idea of separation of church and state has grown increasingly stronger, to the point where most Americans would agree it defines a viable republic. No doubt, the spectacle of preachers exhorting the same nation in opposite directions during the Civil War, settled what was left of the argument.
For Quakers, the most wrenching, disheartening revelation came when they were themselves in unchallenged local control during the French and Indian War. The purest of motives and the most earnest desire to do the right thing provided no guidance for those in charge of the government when the French and Indians were scalping western settlers and burning their cabins. Yes, the Scotch-Irish settlers of the frontier had unwisely sold liquor and gunpowder to the Indians, and yes, the Quakers of the Eastern part of the state had sought to buffer their own safety from frontier violence by selling more westerly land to combative Celtic immigrant tribes. A similar strategy had worked well enough with the earlier German settlers, but reproachful history was not likely to pacify frontier Scots in the midst of a massacre. The Quaker government was expected to do what all governments are expected to do, protect their people right or wrong. To trace the social contract back to William Penn's friend John Locke was too bland for a religion which prided itself on plain speech. Non-violent pacifism just could not be reconciled with the duties of a government to protect its citizens. The even more comfortably remote Quakers of the London Yearly Meeting then indulged themselves in the luxury of consistent logic; a letter was dispatched to the bewildered Quaker Colonials. They must withdraw from participation in a government which levied war taxes. And they obeyed.
Although the frontier Scots were surely relieved to have non-Quakers assume control of their military duty, the western part of the state has still neither forgotten nor forgiven. In their eyes, Quakers were not fit to be in charge of anything. Quaker wealth, sophistication and education were irrelevant; only Presbyterians are fit to rule. A strong inclination toward pre-destination lurks in that idea. Once more, the attractiveness of clear separation of church and state is reinforced.
The French and Indian War in fact had turned out fairly well; most of its victories were located on the European side of the Ocean, anyway. But twenty years later the Revolutionary War turned into a reassertion of the British conquest of all of North America, not merely the part to the west of the Appalachian mountains. To Americans, this came in the form of a demand for taxes to help pay off the costs of a war which greatly benefitted them. The Quaker colonies did not fully sympathize with rebellion, but they had once given up control of a territory larger than England rather than pay war taxes, so they were resistant to both sides in the dispute. Many prosperous and educated Quakers solved their dilemma by fleeing to Canada, but the ardent Quaker proposal for dealing with a coercive British government was not at all impractical. John Dickinson, in particular, argued that since the British motives were economic, success was most likely to come from economic counter-pressure, adroitly leveraged by three thousand miles of intervening ocean. That was shrewd and potentially effective. But the Scots-Presbyterian position was simpler and more direct. If you want us to fight your war, you are going to have to fight to win. The Virginia Cavaliers were probably more likely to win a conventional war if put in charge, but the blunt and almost savage frontiersmen were ideally suited for what has come to be called guerrilla warfare. Washington was a leader, French money was welcome and Ben Franklin was a diplomat, but the clarion call to this particular battle was the voice of Patrick Henry. All in all, the issue of established religion was far more complicated than merely the affirmation of a right to free exercise of religious belief. What united all the colonies was a recognition that, using the church, an arm of the government was just as likely to cause trouble as conducting the state as an instrument of church interests. Eventually, considering how religious America was at the time, there was remarkably little resistance to the firm separation of Church and State in its Constitution.
The Sunday, April 11, 2010 Philadelphia Inquirer contained an eighteen-page statistical summary of the schools within the eight-county area around Philadelphia. The New Jersey school districts, but not the Pennsylvania ones, report per-pupil spending right next to the proportion contributed by a state government. If you know something about the sociology of New Jersey, you form some conclusions about state school aid which probably apply to all states, while confessing they only provably apply to New Jersey. Let's therefore say, it only provably applies to New Jersey that you spend more on schools if you are spending someone else's money.
In the welter of numbers supplied by this statistical report, it seems useful to focus on the strip of school districts along Haddon Avenue, starting from the place where the retreating British soldiers once ferried from Philadelphia to Camden (in 1778, of course.) Haddon Avenue extends directly East until it strikes King's Highway, where the British then turned North to scuttle toward the safety of their navy at New Brunswick. We are thus talking about the school districts of Camden, Collingswood, Haddon Township, Haddonfield and Cherry Hill, with Haddon Heights and Pemberton thrown in because of special features they illustrate.
Pemberton Township in Burlington County spends the largest amount of per-pupil school money in South Jersey, $18,970. It jumps right out at you that 82% of that money is contributed to the school district by the state government. Starting back at the Delaware River, 99% nonwhite Camden gets 88% of its school money from the state and has the second-highest spending of $16,131 per pupil. Moving along the path of the British soldiers, the next town after Camden on Haddon Avenue in Collingswood, spending $14,262. Next comes Haddon Township, spending $13,243. It thus seems to prove that the further you get from the Delaware River, the less you spend on education, because next in order comes Haddonfield, with spending of $12,273. But not quite, because Cherry Hill increases a little to $12, 914. The percentage of state funds follows a parallel sequence from Collingswood to Haddonfield (36%, 31%, 6%) and then rises slightly to 11% in Cherry Hill. For comparison, nearby Haddon Heights spends $13,449, of which 10% derives from a state government. And just in case you think there is a racial implication, nearby Gloucester City is 84% white, and gets 82% of the $16,046 it spends on schools, from the rest of the state by way of state contributions. However, these numbers also allow you to calculate how much the local districts spent of their own money. It turns out it is just the reverse. The more state aid a district gets, the less it spends, itself. The more state aid it gets, the more it spends, period.
The conclusion seems to emerge that an education assistance program designed to achieve equality, actually stimulates appreciably more spending in poor districts than in prosperous ones; at least so far, poor educational quality in poor districts is acknowledged to remain poor. There are some people who might say these statistics suggest a racial correlation, but some others could say the correlation is with distance from Philadelphia, while others would associate factors undisplayed in the statistics. Because there are more non-teachers than teachers employed by the schools, it is not certain that extra money going to schools will improve the teaching. Nevertheless, what is not demonstrated at all is a tendency for better education to be found where school money is most liberally applied. At least, it is safe to say that anyone who claims the quality of education parallels these spending patterns in New Jersey, would be laughed at.
Of course, it is true that prevailing opinions about the local quality of education are as biased as the opinions about the local football teams, or the differing quality of tomato pies. That's partly because the prevailing opinion of the school system has a strong effect on local real estate values, one of the main concerns of real estate agents. My neighborhood in Haddonfield is very close and sociable, so it's been confided that three empty-nest neighbors have sold their Haddonfield houses and moved to Haddon Heights to save money on taxes. When people make decisions like that, they generally know what they are doing. Available data, however, can be misleading to others because total school spending including subsidies does not reflect local property taxes, while local spending does. Empty-nesters are also very likely downsizing to less expensive homes, where of course the taxes seem lower and are also moving to districts which have fewer children per house. Where that isn't the case in the school districts from which they flee, subsidies are extracted from state income and sales taxes, which move from district to district, right along with empty-nesters who move. For those with children attending public schools, emphasis in these considerations is somewhat different.
The voters have no idea how "equal" became "more" money for education. A fair conjecture would be that the poorer districts kept pressing the legislature for more as a matter of "fairness", leaving the more prosperous districts to shout "outrage", but less effectively. By voting down a majority of local school budgets both groups are shouting, all right, although it would be more effective to shout at their representatives in Trenton. Especially in a census year, when gerrymandering is on every agenda.
|Little Red Schoolhouse|
As this blog went to press, voters throughout South Jersey had just gone to the polls to vote for school boards and school budgets. Or, at least they had the opportunity to do so, but mostly 15% of eligible voters actually troubled to vote. Meanwhile, school officials chewed their nails in apprehension that many budgets would be disapproved by the taxpayers, and then what? As it turned out, Haddonfield and Moorestown approved their budgets, but over half of the 700 school districts of the state did not. The voters wanted to send a message they were angry about property taxes, and the seemingly related fact that over half of school employees are not teachers. Some of them mistakenly believe county taxes have something to do with schools. If they had really understood the situation, they would have been angry that the size of their local school budget has comparatively little to do with the level of their total tax burden.
Meanwhile, voters with children had been agitating to support the budget or even raise it, even if it raised their taxes; but empty nesters were urging each other to go vote down this budget because their taxes were already excessive. The parents of schoolchildren urged the empty nesters to move somewhere else where they couldn't vote down school budgets. Actually, however, if more empty nesters moved in, property taxes would go down without affecting the school budget, because empty-nesters pay taxes without using the schools. Both groups are quite misguided, however, because raising or lowering school budgets would probably have very little effect on overall taxes. Even school officials failed to make their best case to the public because they misunderstood the tricky way taxes are arranged. They defend every budget by saying it is already cut to the bone. Since it presently makes relatively little difference to overall taxes whether the budget is cut or increased, that's not useful in persuading empty nesters. Budget cutting does make a lot of difference to the quality of education, however, but that's only half of the facts, not a balanced one. The moral of all this is that the voters better get educated about the Jersey political scene, before their children lose the chance to get educated at all.
Since I'm an empty nester, I am pretty familiar with the empty-nest viewpoint. Three of my friends have told me they moved to neighboring suburbs in order to lower their tax burden; they undoubtedly know what they are talking about. But no one I know is able to reconcile that fact with the equally certain fact that Haddonfield has the lowest spending on education, per pupil, in the southern half of the state. In fact, they don't care, because they know that local school taxes are significantly lower almost everywhere else, and they don't have to explain why. School officials should be more concerned with explaining their rank in per-pupil spending compared with other districts, but they are driven to make cuts in service where ever they can in order to produce a leaner budget for the voters. They too, seem oblivious to the fact that voter anger won't be soothed for long by their budget cutting because it won't affect overall taxes. Taxes are what people are mad about, but they must consider all of them, and understand that as one goes down, the other will probably go up. In another article, we discuss how they mysteriously go up even more. A more sophisticated view would be that in addition to concern about eradicating poverty in the long run, residents of New Jersey are increasingly driven by the need to get their children into better quality colleges. They would like to improve secondary education to do so but are hampered by the relative unavailability of high-quality colleges in the state. Some of this has to do with the recent tendency of Princeton and Rutgers to seek a geographical diversity of students. But to be cynical about it, the development officers of those colleges know that major donors are to be found in Texas and California. In New Jersey, the majority of income taxes are paid by 1% of the population, and that !% are fleeing the state to avoid its heavy income and estate taxes, just as fast as they can. This is the group that tends to donate most heavily to college improvements, and New Jersey colleges are suffering from their flight. That argument may well be hard to sell in Newark and Camden, but it has a major indirect effect on business creation and employment in the state as a whole.
To return to basics, New Jersey school spending is governed by the Abbott decision, which happens to have been written by a friend of mine, who is a fine, smart, well-intentioned jurist. So-called Abbott districts were found by the courts to have significantly underfunded schools, to the point where it seemed an important public issue that the wealthier parts of the state must help these underprivileged kids get an adequate education. Whether improving the school system in their districts would reduce the crime rate, or welfare rate, among these children in later life, was not then known, but subsequent experience does not give it much support. Mainly, it wasn't so much trying to reduce public expenditures in the long run that was behind the Abbott decision, as the feeling it was the duty of a prosperous society to give deprived kids an even break, a sort of penance for success. Accordingly, state school tax revenues were rearranged in an effort to make the per-pupil spending for education approximately equal in all districts, and particularly in the most deprived areas, the Abbott Districts. The first clear sign that something unintended was happening is shown in the accompanying table, indicating that spending in the Abbott districts was in fact now about fifty percent greater than in prosperous nearby suburbs. Equality might be all right, but fifty percent greater was probably not acceptable to the taxpaying public. Just how that paradox gets accomplished in Trenton is not yet clear, but the discomfort level about it is heightened by noticing there is generally an inverse relationship between the spending per-pupil and the perceived quality of the educational product. You might compare drop-out rates, crime rates, SAT scores or whatever, but public perception is not likely to overcome data seeming to show that the more you spend, the worse the education. One wag commented that the data also seems to show that the further you get from the Delaware River, the lower the educational spending gets; that relationship is also more or less linear. So, what matters here is opinion, and the prevailing opinion is emphatic that this data is upside down. The Abbott decision that school spending must be equalized but is actually greater accounts for much of this funny data, but in addition there almost has to be some overlooked secondary factor which exaggerates the Abbott effect by as much as 50% beyond equality.
Even the education industry has an incentive to explain at least and possibly to correct, this disparity. Because in politics while you can prove almost anything with statistics, it is quite seductive to imply that this data proves that extra educational spending hurts the quality of education, at least above a certain level. The education industry wouldn't be wise to let that sort of accusation go unanswered, even if it comes as a wisecrack. The real empty-nester accusation, sorry to say, is that "My school taxes are way too high. They not only do me no personal good but are not helping underprivileged children, either." The consequence is empty-nesters are driven out of town and out of state, making taxes higher for everyone else. It could take decades to undo this damage with an angered public, so everybody better get to work explaining and correcting the problem.
President John Kennedy's sister was mentally retarded; he is given credit for immense transformation of American attitudes about the topic. Until his presidency, mental retardation was viewed as a shame to be hidden, kept in the closet. Institutions to house them were underfunded and located in far remote corners of a state. Out of mind. And while it goes too far to say there is no shame and no underfunding today, we have gone a long way, with new laws forcing states to treat these citizens with more official respect, and new social attitudes to treat them with more actual respect. We may not have reached perfection, but we have gone as fast as any nation could be reasonably expected to go.
However, any social revolution has unintended consequences; this one has big ones, surfacing unexpectedly in the public school system. For example, the king-hating founding fathers were very resistant to top-down government, so federal powers were strongly limited. So, although John Kennedy can be admired for leadership, the federal government which he controlled only contributes about 6% of the cost of what it has ordered the schools to do, and the rest of the cost is divided roughly equally between state and municipal governments. As the cost steadily grows, special education has become a poster child for "unfunded mandates", increasingly annoying to the governments who did not participate in the original decision. We seem to be waking up to this dilemma just at a time when the federal government is encountering strong resistance to further spending of any sort. The states and municipal governments have always been forced to live within their annual budgets, unable to print money, hence unable to borrow without limit. As Robert Rubin said to Bill Clinton when he proposed some massive spending, "The bond market won't let you."
The cost of bringing mentally handicapped individuals back into the community is steadily growing, in the face of a dawning recognition that we are talking about 8% of the population. Take a random twelve school children, and one of them will be mentally handicapped to the point where future employability is in question; that's what 8% means. Since they are handicapped, they consume 13% of the average school budget and growing. The degree of impairment varies, with the worst cases really representing medical problems rather than educational ones. Small wonder there is friction between the Departments of Education and the Medicaid Programs, multiplying by two the frictions between federal, state and municipal governments into six little civil wars, times fifty. An occasional case is so severe that its extreme costs are able to upset a small school budget entirely by itself, tending to convert the poor subject into a political hot potato, regularly described by everybody as someone else's responsibility. There are 9 million of these individuals in public schools, 90,000 in private schools. They consume as much as 20% of some public school district budgets.
All taxes, especially new ones, are bitterly resisted in a recession. Unfortunately, the school budgets are put under pressure everywhere by a growing recognition that our economic survival in a globalized economy depends on getting nearly everybody into college. Nearly everybody wants more education money to be devoted to the college-bound children at a time when there is less of it; devoting 13% of that strained budget to children with limited prospects of even supporting themselves, comes as a shock. Recognizing these facts, the parents of such handicapped children redouble their frenzy to do for them what they can, while the parents are still alive to do it. It's a tough situation because a simultaneous focus on specialized treatment for both the gifted and the handicapped is irreconcilably in conflict with the goal of integrating the two into a diverse and harmonious school community, with equal justice to all.
As school budgets thus get increasingly close scrutiny by anxious taxpayers, handicapped children come under pressure from a different direction. It seems to be a national fact that slightly more than half of the employees of almost any school system are non-teaching staff. Without any further detail, most parents anxious about college preparation are tempted to conclude that teaching is the only thing schools are meant to do. And a few parents who are trained in management will voice the adage that "when you cut, the first place to cut is ADMIN." Since educating mentally handicapped children requires more staff who are not exactly academic teachers, this is one place the two competing parent aspirations come to the surface.
Unfortunately, the larger problem is worse than that. When the valedictorian graduates, the hometown municipal government is rid of his costs. But when a handicapped person gets as far in the school system as abilities will permit, there is still a potential of state dependence for the rest of a very long life. The child inevitably outlives the parents, the full costs finally emerge. We have dismantled the state homes for the handicapped, integrating the handicapped into the community. But when the parents are gone, we see how little help the community is really prepared or able, to give.
Recently, Jason Duckworth of Arcadia Land Company entertained the Right Angle Club with a description of his business. Most people who build a house engage an architect and builder, never giving a thought to who might have designed the streets, laid the sewers, strung out the power and telephone lines, arranged the zoning and otherwise designed the town their house is in. But evidently it is a very common practice for a different sort of builder to do that sort of wholesale infrastructure work -- privatizing municipal government, so to speak. A great deal of what such a wholesale builder does involves wrestling with existing local government in one way or another, getting permits and all that. In a sense, the existing power structure is giving away some of its authority and does so very cautiously. Sometimes that involves suing somebody or getting sued by somebody. Perhaps even greater braking-power on unwelcome change is that the wholesale builder is in debt until the last few plots are sold, and realizes his profit on stragglers. Since it often happens that the last few plots are the least desirable ones, this is a risky business. Big risks must be balanced by big profit potential, and one of the risks of this sort of privatization is that too much consideration may be given to the players at the front end, the farmer who sells the land and the builder who must keep costs down, at the expense of the long-range interests of the people who eventually live in the new town. Top-down decision making is much more efficient, but its price is decreased responsiveness to citizen preferences.
As it happens, Arcadia specializes in towns designed to look like those built in the late 19th Century. Close together, a front door near the sidewalks, front porches for summer evenings. To enhance the feeling of being in an older village, Arcadia specifies certain rules for the architecture, to make it seem like Narberth or, well, Haddonfield. Until recently, suburban design emphasized larger plots of land, and few sidewalks, with streets often ending in cul-de-sacs instead of perpendicular cross-streets in the form of squares. The "new urbanism" appealed to those who were seeking greater privacy, revolving around the idea that if you wanted anything you drove your car to get it. Three-car garages were common, groceries came from distant shopping centers. There are still plenty of new towns built like that today, but Arcadia appeals to those who want to be close to their neighbors, want to meet them at the local small stores scattered among the houses. In the 19th Century, this sort of town design was oriented around a factory or market-place; since now there are seldom factories to orient around, the appeal is to two-income families who want to live in an environment of similar-minded contemporaries. The whole community is much more pedestrian-oriented, much less attached to multiple automobiles.
Since Mr. Duckworth mentioned Haddonfield, where I live, I have to comment that the success of living in a town with older houses depends a great deal on the existence of a willing, capable yeomanry. Older houses, constantly at risk of needing emergency maintenance, need available plumbers, roofers, carpenters, and handy-men of all sorts. Because it is hard to tell a good one from a bad one until too late, this yeomanry has to be linked together invisibly in a network of pride in the quality of each other's work and willingness to refer customers within a network that sustains that pride. A tradesman who is a newcomer to the community has to prove himself, first to his customers, and almost more importantly to his fellow tradesmen. If you happen to pick a bad one, good workmen in other trades are apt to seem mysteriously reluctant to deal with you as a customer, because you too are somewhat on trial. Maybe you don't pay your bills, or maybe you are picky and quarrelsome. In this way, the whole community is linked together in a hidden community of trust. Over time, the whole town develops certain recognizable social characteristics that a brand-new town doesn't yet need. If that time arrives without a network of reliable tradesmen, the town soon deteriorates, house prices fall, people move away.
It's curious that the residents of such a town are a breed apart from the merchants in the nearby merchant strip. If the merchants of town life in that same town, there is much less conflict. More commonly, however, the merchants rent their commercial space and commute from distant places. That disenfranchises them from voting on school taxes and local ordinances and creates a merchantile mentality as contrasted with a resident community, dominated by high school students. One group wants lower taxes, the other group wants to get their kids into Harvard. One group wants space for customer parking, the other group is opposed to asphalt lots. And in particular, the residents want to avoid garish storefronts and abandoned strip malls. Since the only group which has an influence on both sides of this friction are the local real estate agents and landlords, their behavior is critical to the image of the town. When real estate interests are not residents of the town it is ominous, and they are well advised to remember that the sellers of houses are the ones who choose a real estate agent for a house turn-over. There's more to this dynamic than just that, but it's a good place to begin your analysis. Suburban real estate interests are constantly tempted to get into local politics, but politicians are the umpires in this game, and it soon becomes bad for their business if real estate agents potentially put their thumb on the scales.
All politics is local, but all real estate is not entirely local. The present intrusion of the Federal Government into what is normally a purely local issue has become more pointed in the present real estate recession. Almost all mortgages are packaged and sensitized by "Fannie Mae and Freddy Mac". By overpaying for the mortgages they package, these two federal agencies are subsidizing the banks they buy the mortgages from. Or, that is half of the subsidy. The other half is the Federal Reserve, which presently lends money to banks at essentially zero interest. Acquiring free money from the "Fed", while selling mortgages to Fannie Mae at above-market rates, the federal government supports the banks at both ends. And that's not quite all; there is something called the FHA, Federal Housing Authority, which guarantees mortgages. Essentially an insurance policy, the FHA guarantee is issued for a cost to home buyers who meet standards set by Congress (for which, read Barney Frank and Chris Dodd). Although houses during the boom were selling for 18 times the estimated rental value, they are now selling for 15 times rental. FHA will insure such risks, but the banks won't lend more than the normal proportion, which is 12 times rental. Consequently, almost all mortgages are FHA insured, while the federal administration storms with a fury that the banks "won't lend". And indeed it begins to look as though banks will never issue uninsured mortgages until home prices fall another 25%. If home real estate prices do decline to a normal 12 times rental, a lot of people (i.e. voters) will be unhappy, and not just homeowners who bought at higher prices. The market is fairly screaming that you should sell your house and rent, but so far at least, these federal subsidies seem to be holding prices up. When normal pricing arrives, the recession is just about over, but it certainly won't feel that way if you are a seller.
A strange part of capitalism is that no company seems to last forever; seventy-five years is a long life for corporations. For this puzzle, partial insight emerges from American railroad history. After overcoming their novelty and growth pains, railroads soon had to confront the accusation their great size was itself a problem, unbalancing the playing field. Too big? Management resists that argument. Getting bigger was always good, especially when dealing with foreign competitors. A vital public treasure? Needing railroads doesn't create ownership rights, building them does. Railroad founders discovered a public need and served it; but the public replied it was their need and so it was their railroad, only temporarily in the hands of managers. Nothing useful was going to come of this faux debate, which structured itself in the 19th Century to reach equilibrium, not agreement. There is some reason to hope the ending of the Cold War a century later may have established more permanent understandings, but even those remain hostage to future history. By 1970 history seemed to be making quite the opposite verdict; at least eight major Northeastern railroads collapsed into helpless bankruptcy. Management blamed the senseless labor union work rules. The unions blamed incompetent management. As is usually the case, there's one lesson here for investors and quite a different one for reformers. All of the debaters need to reflect that possibly the collapse of the railroads was caused by attempting to create institutions which were bigger than they would need to be, fifty years later. Unless a way is provided for them to shrink, some form of shark will eventually eat them alive.
I am greatly indebted to a senior partner of one of Philadelphia's great law firms for insight into the decline of the railroad industry in Philadelphia, which took place during thirteen years of his active law practice on behalf of one of the bankrupt railroads. The insights are his, the opinions are mine.
|Interstate Commerce Commission Act of 1887|
A railroad is inherently a monopoly. At first, that isn't obvious, as the railroads snake around to service potential customers. But it soon becomes apparent that it is generally easier to move a factory to an established rail head than to move an established railroad to the factory. Customers who doubt this soon find themselves less competitive than the competitors who recognize facts and respond to them. The location of rivers and raw materials make a difference, quite often enough to move the railroad; but when the railroad moves, it is only a matter of time before the mighty factory has to consider doing the same. That process tends to force everybody to greater efficiency, but it inconveniences many people, who appeal to their unions, who appeal to their politicians. This is a short summary of the origins of the Interstate Commerce Commission Act of 1887, which set the pattern for most later regulation of interstate commerce. The ICC Act, regulating and constraining the activities of railroads, was made law only a decade or so after the transcontinental railroads came into being. Since this had previously been an era of notoriously brutal clashes between the Reading Railroad and the Mollie Maguires, the entire regulatory process has been conducted like a cartoon of that remorseless struggle between one particularly fabled Irish Railroad President and one equally fabled Irish Railroad Union of song and story. The ultimately tragic end of the railroads was declared official by the Railroad Reorganization Act of 1973, which consolidated the freight business into a government-owned company called Conrail. For thirty years before the final demise, just about every president of just about every railroad -- was a lawyer. Others could run the engineering and the finance; in this business, survival itself depended on relations with government.
This description, while accurate in a way, misses a central point: what happens to an industry which was regulated and unionized as a monopoly -- when it develops competition and is no longer a monopoly? It badly needs to downsize, to reduce the overhead which comes from overcapacity, but the unions resist. Unless a way to reduce costs can be found, the company has put its foot on the down-escalator. The stock-market price declines as the profits erode, so borrowing becomes more expensive; the bond markets will sit in judgment on the outcome. A desperate management turns to technology and automation to improve productivity enough to compensate for the bulging overhead; but when improved technology makes even more employees redundant, the union balks and the increasingly obsolete regulations assist them. Competition from the highways and airlines is not going to relent, the unions feel they cannot or need not compromise, and sometimes will not permit productivity improvements. To the extent a company in that situation cannot reduce costs without reducing employment, it is very likely doomed. As the laws are now structured, the only escape is through bankruptcy. A nation's inability to stop this sort of corrosive cycle is one of the main reasons that typical American corporations seldom survive longer than a century. In the opinion of the constructive destruction theorists, that is a good thing for the nation. But it is a painful way to progress, and one does have to hope that a better way can someday be found.
For railroads, the main destructive force of federal regulation grew out of the rather rapid discovery that congressmen would demand a railroad in every state. While it may be hard to imagine a state that could survive the Industrial Revolution without at least one railroad, that wasn't necessarily imperative when new states were created and the land was cheap. And then if the Senate could require at least one railroad, it could also require stops and stations for every hamlet regardless of rational economics. And, if someone got struck by a passing train, it was hard to resist the demand for bridges over the tracks or tunnels under them. if some local developer wanted a grain elevator, the Senator was glad to make one mandatory. In their first fifty years when rail traffic was booming, railroad management was happy to comply. Everybody wanted to see the business get bigger. After 1920, however, the highways were starting to gain on the railroads; it was time to start being cautious. There began to be signs that requiring such excesses as five trainmen for every freight train, limiting the distance they could travel without a replacement, demanding "decent" wages, however, that might be defined, and a whole host of other costly impositions on the railroad -- were soon going to be things the railroads could no longer afford. In one way of looking at it, there was not even a need to be clairvoyant. Railroads were a century old in 1930; it was time to invest in something else. And by the way, it was probably time to look for another line of work.
It is common to hear that railroaders failed to notice they were in the transportation business, not merely the railroad business. That seems too easy to say; they were already in three distinct industries, freight, commuter rail, and long-distance rail. All three divisions were once profitable. The automobile first threatened the commuter rail lines, but then the airlines threatened the long-distance passenger business. And then the freight business was parasitized by the rest of the railroad industries. When too many people climbed into the lifeboat of profitable bulk cargo, it too collapsed from overload and nothing would rescue the whole rail industry except bankruptcy. It now needed suspension of government regulation and union contracts in order to merge, split, reorganize and introduce fifty years of accumulated but stalled productivity enhancements. Only bankruptcy would provide a way to keep the railroads limping along while drastic things were being done to them. Meanwhile, it was business as usual on the rhetoric battlefield; class warfare was never far from the bargaining table.
At this point in the analysis, my lawyer friend paused. In his opinion, the demise of the rail industry was not the main cause of the industrial decline of Philadelphia. The most important labor union struggle, in his opinion, resulted from the far more destructive behavior of the longshoremen's union, because ocean ships can quite easily move to another city where they are better treated; union intransigence very quickly destroys an international port. And to be fair, it isn't just unions that are tempted to treat foreigners badly. Almost all sovereign states have a history of taking what they can from non-citizens in their harbors; in America's case, there was a time when piracy was quite a respectable trade, conducted under the name of privateering. In the long run, exploiting foreign traders is self-defeating, but the temptation to exploit is always there. When intransigence gets out of hand, particularly when it is amplified by religious or class warfare, local poverty becomes quickly evident in maritime trade. Railroads just take a little longer to reach the same point.
|King George III|
BECAUSE America had recently revolted to rid itself of King George III, the Constitutional framers of 1787 sought to construct a government forever free from one-man rule. Inefficiency could be accepted but central dictatorial power, never. It is unrealistic however to expect a wind-up toy to keep working forever, and our Constitution creates the same worry. After two centuries, some chinks have appeared.
Political parties existed in 18th Century England and Europe, but the American founding fathers seem not to have worried about them much. Within ten years of Constitutional ratification, however, Thomas Jefferson had created a really partisan party which naturally provoked the creation of its partisan opposite. James Madison was slowly won over to the idea this was inevitable, but George Washington never budged. Although they were once firm friends, when Madison's partisan position became clear to him, Washington essentially never spoke to him again. Andrew Jackson, with the guidance of Martin van Buren, carried the partisan idea much further toward its modern characteristics, but it was the two Roosevelts who most fully tested the U.S. Supreme Court's tolerance for concentrating new powers in the Presidency, and Obama who recognized that the quickest way to strengthen the Presidency was to weaken the Legislative branch.
Dramatic episodes of this history are not central to present concerns, which focuses more on the largely unnoticed accumulations of small changes which bring us to our present position. Wars and economic crises induced several presidents, nearly as many Republicans as Democrats, to encourage migrations of power advantage which never quite returned to baseline after each crisis. Primary among these migrations was the erosion of the original assumption of perfect equality among individual members of Congress. A new member of Congress today may tell his constituents he will represent them ably, but when he arrives for work he is figuratively given an office in the basement and allowed to sit on empty packing cases. This is not accidental; the slights are intentional warnings from the true masters of power to bumptious new egotists, they will get nothing in their new environment unless they earn it. Not a bad idea? This schoolyard bullying is a very bad idea. If your elected representative is less powerful, you are less powerful.
|Houses of Congress|
Partisan politics begins with vote-swapping, evolves into a system of concentrating the votes of the members into the hands of party leaders, and ultimately creates the potential for declaring betrayal if the member votes his own mind in defiance of the leader. The rules of the "body" are adopted within moments of the first opening gavel, but they took centuries to evolve and will only significantly change direction on those few occasions when newcomers overpower the old-timers, and only then if some rebel among the old timers takes the considerable trouble to help organize them. In the vast majority of cases, after adoption, the opportunity to change the rules is then effectively lost for two years. Even the Senate, with six-year staggered terms, has argued that it is a "continuing body" and need not reconsider its rules except in the face of a serious uprising on some particular point. Both houses of Congress place great weight on seniority, for the very good purpose of training unfamiliar newcomers in obscure topics, and for the very bad purpose of concentrating power in "safe" districts where party leaders are able to exercise iron control of the nominating process. Those invisible bosses back home in the district, able to control nominations in safe districts, are the real powers in Congress. They indirectly control the offices and chairmanships which accumulate seniority in Congress; anyone who desires to control Congress must control the local political bosses, few of whom ever stand for election to any office if they can avoid it. In most states, the number of safe districts is a function of controlling the gerrymandering process, which takes place every ten years after a census. Therefore, in most states, it is possible to predict the politics of the whole state for a decade, by merely knowing the outcome of the redistricting. The rules for selecting members of the redistricting committee in the state legislatures are quite arcane and almost unbelievably subtle. An inquiring newsman who tries to compile a fifty-state table of the redistricting rules would spend several months doing it, and miss the essential points in a significant number of cases. The newspapers who attempt to pry out the facts of gerrymandering are easily gulled into the misleading belief that a good district is one which is round and compact, leading to a front-page picture showing all districts to be the same physical size. In fact, a good district is one where both parties have a reasonable chance to win, depending for a change, on the quality of their nominee.
So that's how the "Will of Congress" is supposed to work, but the process recently has been far less commendable, and in fact, calls into dispute the whole idea of a balance of power between the three branches of government. We here concentrate on the Health Reform Bill ("Obamacare") and the Financial Reform Bill ("Dodd-Frank"), which send the same procedural message even though they differ widely in their central topic. At the moment, neither of these important pieces of legislation has been fully subject to judicial review, so the U.S. Supreme Court has not yet encumbered itself with stare decisis of its own creation.
|Three branches of government|
In both cases, bills of several thousand pages each were first written by persons who if not unknown, are largely unidentified. It is thus not yet possible to determine whether the authors were affiliated with the Executive Branch or the Legislative one; it is not even possible to be sure they were either elected or appointed to their positions. From all appearances, however, they met and organized their work fairly exclusively within the oversight of the Executive Branch. Some weighty members of the majority party in Congress must have had some involvement, but it seems a near certainty that no members of the minority party were included, and even comparatively few members of highly contested districts, the so-called "Blue Dogs" of the majority party. It seems safe to conjecture that a substantial number either represent special interest affiliates or else party faithful from safe districts with seniority. The construction of the massive legislation was conducted in such secrecy that even the sympathetic members of the press were excluded, and it would not be surprising to learn that no person alive had read the whole bill carefully before it was "sent" to Congress. It's fair to surmise that no member of Congress except a few limited members of the power elite of the majority party were allowed to read more than scattered fragments of the pending legislation in time to make meaningful changes.
The next step was probably more carefully managed. No matter who wrote it or what it said, a majority of the relevant committees of both houses of Congress had to sign their names as responsible for approving it. Because of the relatively new phenomenon of live national televising of committee procedure, the nation was treated to the sight of congressmen of both parties howling that they were only given a single day to read several thousand pages of previously secret material -- before being forced to sign approval of it by application of unmentioned pressures enabled by the rules of "the body". When party members in contested districts protested that they would be dis-elected for doing so, it does not take much imagination to surmise that they were offered various appointive offices within the bureaucracy as a consolation. As it turned out, the legislation was only passed narrowly on a straight-party vote, so there can be a considerable possibility of its likely failure if the corruptions of politics had been set aside, with members voting on the merits. Nevertheless, since this degree of political hammering did result in a straight-party vote, it leaves the minority party free to overturn the legislation when it can. The prospect of preventing an overturn in succeeding congresses seems to be premised on "fixing" flaws in the legislation through the issuance of regulations before elections can open the way to overturn of the underlying authorization. Legislative overturn, however, is very likely to encounter filibuster in the Senate, which presently requires 40 votes. Even that conventional pathway is booby-trapped in the case of the Dodd-Frank Law. The Economist magazine of London assigned a reporter to read the entire act, and relates that almost every page of it mandates that the Executive Branch ("The Secretary shall") must take rather vague instructions to write regulations five or ten times as long as the Congressional authorization, giving the specifics of the law. The prospect looms of vast numbers of regulations with the force of law but written by the executive branch, emerging long after the Supreme Court considers the central points, years after the authorizing congressmen have had a chance to read it, and well after the public has rendered final judgment with a presidential election. The underlying principle of this legislation is the hope that it will later seem too disruptive to change a law, even though most of it was never considered by the public or its representatives.
|Bill become a Law|
The "regulatory process" takes place entirely within the Executive branch. Congress passes what it terms "enabling" legislation, containing language to the effect that the Cabinet Secretary shall investigate as needed, decide as needed, and implement as needed, such regulations as shall be needed to carry out the "Will" of Congress. Since the regulations for two-thousand-page bills will almost certainly run to twenty thousand pages of regulations with the force of law, the enabling committee of Congress will be confronted with an impossible task of oversight, and thus will offer few objections. The Appropriations Committees of Congress, on the other hand, are charged with reviewing every government program every year and have the power to throttle what they disapprove of, by the simple mechanism of cutting off the program's funds. Members of the coveted Appropriations Committees are appointed by seniority, come from safe districts, and are attracted to the work by the associated ability to bestow plums on their home districts. By the nature of their appointment process, unworried by the folks back home but entirely beholden to the party bosses, they have the latitude to throttle anything the leadership of their party wants to throttle badly enough. The outcome of such take-no-prisoners warfare is not likely to improve the welfare of the nation, and therefore it is rare that partisan politics are allowed to go so far.
The three branches of government have become unbalanced. These bills were almost entirely written outside of the Legislative branch, and the ensuing regulations will be written in the Executive branch. The founding fathers certainly never envisioned that sweeping modification will be made in the medical industry and the financial industry, against the wishes of these industries, and in any event without convincing proof that the public is in favor. This is what is fundamentally wrong about taking such important decisions out of the hands of Congress; it threatens to put the public at odds with its government.
|Justice George Sutherland|
There is no need to go further than this, harsher words will only inflame the reaction further than necessary to justify a pull-back. And yet, the Supreme Court would do us mercy if it doused these flames; the Supreme Court needs a legal pretext. May we suggest that Justice George Sutherland, who sat on the court seventy years ago, may have sensed the direction of things, short of using a particular word. Justice Sutherland recognized that although it is impractical to waver from the principle that ignorance of the law is no excuse, it is entirely possible for a person of ordinary understanding to read law in its entirety and still be confused as to its intent. He thus created a legal principle that a law may be void if it is too vague to be understood. In particular, a common criminal may be even less able to make a serious analysis. Therefore, at least in criminal cases, a lawyer may well be void for vagueness. In this case, we are not speaking of criminals as defendants or civil cases of alleged damage of one party by a defendant. Here, it is the law itself which gives offense by its vagueness, and Congress which created the vagueness is the defendant. Since we have just gone to considerable length to describe the manner in which Congress is possibly the main victim, this situation may be one of the few remaining ones where a Court of Equity is needed. That is, an obvious wrong needs to be corrected, but no statute seems to cover the matter. The Supreme Court might give some thought to convening itself as a special Court of Equity, on the special point of whether this legislation is void for vagueness.
We indicated earlier that one word was missing in this bill of particulars. That would be needed, to expand the charge to void for intentional vagueness, an assessment which is unflinchingly direct. It suggests that somewhere in at least this year's contentious processes, either the Executive Branch or the officers of the congressional majority party, or both, intended to achieve the latitude of imprecision, that is, to do as it pleased. Anyone who supposes the general run of congressmen voluntarily surrendered such latitude in the Health and Finance legislation, has not been watching much television. Given the present vast quantity of annually proposed legislation, roughly 25,000 bills each session, the passage of a small amount of vague legislation might only justify voiding individual laws, whereas an undue amount of it might additionally justify a reprimand. However, engineering laws which are deliberately vague might rise to the level of impeachment.
EVERYONE might profit from reading Plato on the subject of republics, not to mention reading James Madison. Both The Republic and The Federalist were conjuring republics they proposed, not ones they had experienced. After Madison did get the hands-on experience he had such radical changes of opinion his friend George Washington essentially never spoke to him again. Not only in republics, of course, does reality prove different from founding theory. It might seem more measured to say of republics that two centuries of their reality proves to be such an extension of theory, it effectively departs from it. In essence, the Republican idea is to limit the voters to one periodic review of their representative's term of office overall, not in ongoing picky detail which would hamper him. This definition contrasts republics with democracies and implies the reason to favor republics. The elected representative is given full power to act during his term in office, but must eventually face the voters for accounting at the fixed time for re-election. Plato and Madison were right about extending latitude to one's chosen representative, but they failed to predict how effectively that latitude might be stolen by the legislative body itself and controlled by rules and leadership which skirt ratification by the general public outside their chamber, in any district. The Romans, of course, did know what they were talking about, but history has tended to ascribe Roman difficulties -- assassinations, for example -- to flaws in Roman character rather than in the construction of the Roman Republic. After describing some problems history has revealed about our own system, this essay is written to propose a solution. A second essay follows, to defend that solution.
|Joseph L Bristow|
The differences between House and Senate in the original U.S. Constitution were three, but since the Seventeenth Amendment in 1913, there are now only two. Originally, Senators were selected by the states they came from, mostly by the legislatures. A century of experience demonstrated the result was cronyism, members of the legislature using senatorial appointments as bargaining chips and for the most part limiting the choice to one of their own members. The provision probably did attract a higher grade of legislator overall, encouraging those primarily ambitious to be U.S. senators to have a try-out in the minor leagues first. It did give the State government serious power to punish a U.S. senator who failed to please the home state. And this selection process made it simpler and cheaper to run for the job as U.S. senator. This feature encouraged candidates with competing for career choices, otherwise discouraged by the expense and unpleasantness of candidacy, to step forward. But by 1913 all this was seen as a way for cronyism to dominate the process, swapping appointments for favors, or even more tangible bribes. From the distance of another century, it can be seen that the steadily declining power of state legislatures was matched by a declining quality of their elected membership, leading to a rising level of sordidness in their foibles. Hapless amateurs were largely supplanted by career politicians. After the Civil War "states rights" stirred up memories of secession and led to a deliberate weakening of the states' role. Whatever the reasoning, the mentality of Progressivism was sweeping the country in 1913, and popular election of senators was deemed a Good Thing, swept into general satisfaction. Doubt about whether it all made as much difference as claimed lies in the reality that from 1913 to 2010, one quarter (182) of all Senators have first arrived in the Senate through appointment by a Governor to fill an unexpired vacancy. Many of these vacancies have of course been contrived for the purpose.
The relative power of a senator and a representative lies in the size of the population who vote for them, and the frequency with which they must endure that unpleasantness. Members of the House are elected for two years and members of the Senate are elected for six; the voting constituency of 100 Senators is generally much larger than that of 532 Representatives, so because the population grows faster than the number of states, the representation discrepancy also grows. The frequency of running for reelection seems to be so irksome that whenever a Senate seat falls vacant, some sitting Congressman from that state is almost certain to try to switch. Of course, it is true that with only a quarter as many senators as congressmen, the power of each vote is weightier. To the extent that committee memberships represent special insider power, a senator does belong to more committees but is more severely stretched to attend them all. Each senator's vote does have a greater scarcity value, but a Representative who tends to business is more likely to know what he is talking about, hence better able to be influential in the committees where most matters are really decided. The limits of merit promotion in both houses of Congress lie in the differing power of various committees, while the favor of appointment remains within the iron control of caucus leadership. In public, senators seem generally more polished and experienced in public persuasion. The persuasion that counts, however, is of gaining the respect of colleagues in your own legislative body, always restrained by the power of leadership to coerce conformity. Public persuasiveness, by contrast, is often little more than glibness, reflecting greater experience with dodging an issue to conceal a lack of depth in it. Almost all senators aspire to the presidency, although few achieve it. No Congressman has been elected President since Warren Harding; indeed, few Congressmen even dare to seek the nomination. The appointment of Gerald Ford was a special situation. However, it is worth pondering that during the early days of the republic, the House of Representatives was considered much more prestigious than the Senate, and that curiosity continues to raise an important question just why it is now reversed.
The differences in prestige between the House and the Senate cannot be ascribed to the comparatively minor differences in their Constitutional definition, the size of their district and the frequency of election. Otherwise, we could immediately improve the quality of congressmen by reducing the limit of their number and frequency of re-election, which scarcely anyone has proposed. The more likely source of the problem can be found in the differing rules of procedure which each body has adopted; and reaffirms at the opening of each term. Various strategies of committee assignment and seniority have adapted to the reality that newly elected politicians rarely have any skills other than the ability to get elected. But almost everyone can learn, given enough time being exposed to a topic. A seniority system can occasionally lead to someone who is hopeless, gradually floating into a position where he can do great harm. Provision must be made for graceful exceptions to the seniority rule, usually by excluding a member from important committees until he has demonstrated some competence, less often by later dropping someone who has age- or alcohol-diminished faculties. Underlying this approach is a contempt bred of experience for the wisdom of the voters, back there in the district, whereas the leaders of the fraternity can protect the nation by judiciously devised rules. Sometimes it is, unfortunately, necessary to be a little hard boiled.
So far so good. When Jefferson and Martin Van Buren invented political parties, the bodies of Congress responded by inventing caucuses. George Washington was not a learned man, but he knew he hated this system. James Madison probably feared political parties more than he hated them, so he incurred Washington's permanent displeasure by getting good at manipulating what he saw as the winning strategy. Van Buren's fate was more ironic; after inventing many of the unpleasant little strategies of modern politics, he was defeated by William Henry Harrison in the "log cabin" election of 1840. Harrison hadn't been born in a log cabin at all, he was born in a Virginia mansion, hee, hee, hee. George Washington wouldn't have chuckled at that one, he would have been livid.
Party caucuses have only one central feature, which is vote-swapping. Many of the strategies of this unattractive behavior were outlined in elegant detail by Pliny the Younger, in the Roman Senate, and James Madison the student of government had sought to avoid them. When he decided it was hopeless, he joined them and got good at it. In retrospect, the premier example of vote-swapping was the trade which Madison and Hamilton made, placing the nation's capital in Virginia/Maryland instead of Philadelphia, in return for federally redeeming the Revolutionary debts for all 13 states, when Virginians had already paid theirs off. Philadelphia had essentially nothing to say about it. Pliny had cautioned and subsequent practitioners have followed the advice to cover your tracks by swapping votes for an issue seemingly unrelated to the one in dispute. That's about all there is to vote-swapping, find out what the guy wants badly enough, and trade him something for it. It follows that it's wise to give off the appearance that you don't want much of anything. A corollary is that political caucuses try to conduct even innocent or public-spirited discussions in secret, making public only what is expedient to be made public. And a further corollary: some members of a caucus are from totally "safe" districts. Occasionally their votes can safely be traded for something the opposing party wants but the caucus feels necessary to claim to oppose. When a caucus wants something badly enough to trade it for something else but is three or four votes short, the opposing caucus may trade the four votes from safe districts while violently denouncing the dirty turncoats. All this is known as party loyalty. When things are particularly tough, party loyalty can be enforced by finding out what you want badly and taking it away from you. When these whips are applied to you, a grievance develops. Fine, what do you want to trade in return for vengeance? Many of these refinements seem to come, not from Rome, but from Sicily.
As was stated at the beginning, the purpose of this essay is not to rail at Congressional corruption, but to counteract it to some degree. Since the worst features of this system require secrecy and public duplicity to be effective, the best remedy is sunshine. Not about what Roosevelt did in his third term, but about what your local congressman might do next week, and his fear you will find out. His fear that a blogger will tip off the local newspaper or radio station, encouraging someone else with the ambition to file for election against you. And his fear that when he asks someone for a campaign contribution, that person will bring up the topic in question. His fear that the local political boss will decide he can't win.
This was more or less the system which the founding fathers, James Madison chief among them, envisioned for this shining city on a hill. And which two centuries of rather clever schemers have gradually eroded. The highly desirable feature of a republic is that the elected person is free to represent his own interpretation of what is best for his district or, failing that, what is best for the nation. The elected representative is encouraged to risk defeat in the next election, if in his judgment what is good for the district is bad for the nation. But he is not a suicide bomber if his vote will make little difference in the outcome he can be forgiven for taking cover. One would wish that fewer of them would speak one way and vote in the opposite direction, but that can be forgiven if someone back home in the district is keeping score and letting others know of it. The fundamental principle of a republic as distinguished from a pure democracy is that a representative, while free to act during his term in office, remains obliged to face the voters at the appointed time. Our system has come to exaggerate the actual extent of freedom to use judgment because the freedom has been stolen by party leaders through the application of schemes too devious to detail. But freedom is fundamentally a good thing. What has come to be so lacking is the idea of facing an informed electorate in making a choice between you and an informed opponent. The public, it must be feared, doesn't know beans.
And so the proposal for fixing this mess is difficult, but it can be stated simply. The recent economic boom created nearly a thousand billionaires; maybe four hundred would be a number that would escape challenge. If only fifty of them would endow think tanks in all fifty state capitals, and the fifty-first would endow an organization dedicated to making their research available to the public, then perhaps another fifty would be prompted to create a second think tank in each state capital on the opposite political side. Two polarized think tanks in each state capital, just imagine it. As things now stand, it would be a sufficient first step if that happened in only one state, and the rest of the country could watch what happens.
ONCE Cornwallis surrendered to Washington at Yorktown in 1781, there emerged the usual reluctance of troops on both sides to get killed for a dispute that was already settled. The British monarchy had ample experience with wars and fully expected to exploit this trait of exhausted soldiers at the end of one. It was clear to the British the colonies could neither be reconciled nor forcibly subdued. What was not clear was how much national advantage might still be extracted from a peace conference. Bluffs and intransigence might still achieve what bayonets could not. Seasoned diplomats are accustomed to such manipulation, but the new American nation only had Benjamin Franklin grown equal to it, representing Pennsylvania and Massachusetts with the British Ministry for several years. Beyond that, however, a particularly American trait was emerging to quit the game before the last card is played. During the Nineteenth century, anticipating and resisting that irresolute temptation came to be called, Character.
The American Revolutionary Army was seldom well-fed, never well armed. Hardly anyone expected a war lasting eight years, or the British regulars to be so mean and effective. Major General Benedict Arnold had seemed like our perfect soldier but turned traitor while in charge of a major defense position at West Point, New York. Conditions for wives and children at home were bad. And the Congress in Philadelphia was willing to inflate the currency, hold back soldiers' pay, pinch pennies on supplies. Other colonies frequently promised to send more soldiers than they actually supplied. Not that they were proud of themselves; they skulked. Surely, some state legislatures and representatives were better than others, but they are almost impossible to identify, now. They all must have been somewhat complicit, or we would have heard more of them denouncing each other. It must have been supremely painful for Washington to receive promises of troops and supplies that he privately doubted, and then to be obliged to assure his troop's help was forthcoming. Inevitable disillusionment discredited him more than the Governors who put him in that position. The British troops surely shared their enemy's reluctance to get killed for a war that was over. They partied and roistered in New York, but who knows what general in London might suddenly order an attack on Washington at Newburgh, just to make overall British defeat seem less humiliating.
|Headquarters, Newburgh NY|
During sixteen months of this agony, Washington wrote many letters to state Governors, keeping them informed while asking for their help. The custodians of the Headquarters museum proudly show the various tables and chairs for his aides to translate French and Spanish, to make thirteen copies of just about everything, and careful files of all correspondence. Washington was an organized person, they say, or else his chief of staff was organized. Someone like Alexander Hamilton, perhaps. Out of all this headquarters communication system gradually emerged the system of Circulars. The General was in a position to see huge deficiencies in the government system for which he dedicated his life, and apparently grew haunted by the idea that all this suffering would be for nothing if the government which emerged was anything like what he was now seeing. His Circulars to the governors began to take on the style of outlining what kind of government the United States ought to have. It must, for example, acquire federal power; the states must turn over more of their own power to the decisions of a single executive. It must pay its debts; a mighty nation does not chisel its creditors. It must suppress the inclination to squabble and think the worst of one another. It must, in his phrase, be virtuous.
Two emphatic views of the new country emerged from Washington's time in Newburgh. The inability of the government to pay its soldiers, suffering or no suffering, was particularly agonizing. And the close call he had with threatened mutiny made it much worse. Robert Morris had run out of tricks and instructed him the central issue was for the Federal government to be able to levy taxes for servicing the debt, which would make it possible to borrow still more through leverage. Washington never forgot this episode, and at several points, during his later presidency, it guided him well. The other episode which made a lasting impression was to some degree his own fault. He was so impassioned in his hatred of monarchy that his closest friends, Hamilton and the two Morrises -- who had never seen much to criticize in a monarchy -- essentially gave up on trying to persuade him, and took the side of General Gates the hero of Saratoga in a planned mutiny. Washington put it down with nothing but the power of his personality and a little play-acting with his bifocals, but he almost lost the confrontation in an instant. Washington had many close calls with death on the battlefield, but these two near-defeats pretty much shaped the rest of his life as our first President. Indeed these two hatreds, of debt and monarchy, continue to characterize many Americans to a degree that others would describe as unreasonable.
And then he made a mistake. As a way of proving his lack of personal motive, he announced in advance he would be leaving public service forever. Today, every lame duck knows that's a bad idea, even when you mean it. And while he may have sincerely thought he meant it at the time, events show he really didn't. Although he probably didn't want to be indispensable, circumstances made him so. He discovered how little he knew of the technical details of government, and thus how much he needed James Madison's help. Washington lacked skill in managing finance; having depended on Robert Morris throughout the war, he needed Alexander Hamilton at least to handle a peaceful economy. But there was no running away from the central issue; he would be forced to recognize how much he overshadowed anyone else in demeanor, and so, how unlikely it was that anyone else could bully others into cooperating. He was a great-souled person, in Aristotle's phrase. Franklin alone perhaps understood and privately doubted that even Washington could pull it off. Washington's Circulars were driving him straight toward seeking the Presidency he widely proclaimed he did not want and would not accept. And thereby he threatened the one thing in life he prized more than any other: his word of honor to keep his promises.
Note: James Madison, the central figure in the design and meaning of the Constitution, the only person allowed to keep a journal of the deliberations, and the main author of the Federalist Papers which explain and defend the final product, was eventually elected President of the United States. As such, he was acutely aware of the intention of the Constitution's limitation of federal powers, which particularly extended to prohibit the Federal Government from doing otherwise desirable things. On November 3, 2010, the Wall Street Journal republished part of Madison's veto message of March 17, 1817, in which he reminds the Congress and the nation that it was unconstitutional for the Congress to do prohibited things, thereby assuming unenumerated powers.
|President James Madison|
"The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers, or that it falls by any just interpretation within the power to make laws necessary and proper for carrying into execution those or other powers vested by the Constitution in Government of the United States."
"The power to regulate commerce among the several States" cannot include a power to construct roads and canals, and to improve the navigation of water courses in order to facilitate, promote, and secure such a commerce, without a latitude of construction departing from the ordinary import of terms strengthened by the known inconveniences which doubtless led to the grant of this remedial power to Congress."
To refer the power in question to be "to provide for the common defense and general welfare" would be contrary to the established and consistent rules of interpretation...It would have the effect of subjecting both the Constitution and laws of the several States in all cases not specifically exempted to be superseded by the law of Congress... Such a view of the Constitution, finally, would have the effect of excluding the United States from its participation in guarding the boundary between the legislative powers of the General and the State Governments..."
I am not unaware of the great importance of roads and canals and the improved navigation of water courses, and that a power in the National Legislature to provide for them might be exercised with signal advantage to the general prosperity. But seeing that such a power is not expressly given by the Constitution, and believing that it can not be deduced from any part of it without an inadmissible latitude of construction and reliance on insufficient precedents; believing also that the permanent success of the Constitution depends on a definite partition of powers between the General and the State Governments, and that no adequate landmarks would be left by the constructive extension of the power of Congress as proposed in the bill, I have no option but to withhold my signature from it.."Postscript: This veto was the last act of Madison's term in office, and probably does not adequately describe the problem or even Madison's view of it. The Louisiana Purchase had dramatized some awkward features of strict construction of the Constitution in areas never before considered or discussed. Albert Gallatin had earlier arranged the workaround of treating the limitation as applying only to the financing of interstate transportation arrangements and was starting the process of what we now call the "Living Constitution" by progressive circumvention. While following Madison's reasoning, he made the unfortunate choice of circumvention in preference to confronting issues directly through the Amendment process. The Tea Party movement of 2010 could be evidence that this choice is regarded by many as unfortunate. The Constitution has probably not adequately appraised the tendency of legislation to achieve final passage quite near the congested end of an electoral term, leaving little time to respond to Congressional action with the intentionally cumbersome Constitutional Amendment process. If there is a turn-over of party control at that time (which is usually the holiday season), a successful outcome appears still more unlikely in the time available. Fixing such an inadvertent technical problem would not appear to be difficult, and a Blue Ribbon study committee is suggested.
If George Washington were still alive he would no doubt be a Republican, but the term Republican Court actually has nothing to do with R's and D's. It was a scheme deliberately cooked up by Washington and Madison to enlist support by the new government's important ladies for a modified version of a European royal court, to make thirteen colonies into a cohesive nation. A most remarkable thing about it was its frank imitation of the royal courts, something only the Father of His Country could pull off in former colonies which had just fought an eight-year war to be rid of the monarchy. It is one more great testimony to the faith of Americans in George Washington; but it also testifies to the power of enthusiastic women, once they agree on a project. Chief among the leaders in this court was Elizabeth Powel, along with her niece living around the corner on Spruce Street, Anne Willing Bingham. Recently, the Peale Society of the Academy of Fine Arts held a candlelight dinner in Mrs. Powel's magnificent second-floor dining room, while scholars of the history of the Republican Court told assembled notables of Philadelphia what had once been what, during the first ten years of the Republic.
Members of the early Congress were largely the same men as the founding fathers of the Constitutional Convention, hand-picked by Washington and Madison to persuade the legislatures of their colonial states to give up state sovereignty, for a unified nation. There was the difference that now they brought their wives to live in Philadelphia during sessions of Congress. Those women wanted to know each other and wanted to have something exciting to do together in the largest city in the nation. Their husbands knew well how politically useful it was to be socially acquainted in this way, so everybody liked the idea of suddenly becoming nationally connected. The initial idea proved unworkable. Martha Washington was supposed to become Lady Washington, reigning over weekly receptions.
|In Our Cups|
But Martha, unfortunately, wasn't up to the task, and Anne Bingham whose rich husband had taken her on lengthy tours of European royal courts, moved right in and took charge of this project. Besides her cousin Elizabeth Powel, notable members of this social whirl were the two daughters of Chief Justice Benjamin Chew, Alexander Hamilton's wife, and various members of the Shippen and Willing families. Members of the family of Lord Sterling of New Jersey, Charles Carroll of Carrolton, Maryland, Cadwaladers of various sorts, and a number of other names famous from then until even today joined their affiliations with ladies from other states through parties and even some weddings. John Adams was particularly awestruck by the poise and beauty of Anne Bingham, although Abigail Adams may not have been quite so infatuated. It was a dizzy whirl, with dinner parties the central activity just as they are in Philadelphia even today. Country bumpkins had to learn how to dress, to talk and to eat with the right spoon and keep their elbows off the table; those who could tactfully show them what was what were friends for life. Centuries later, Emily Post made a fortune writing books about these rules.
In those days, they even had their war cry, which was to raise a glass and shout back "Huzzah" in response to the proposer of a toast, who had raised his glass starting the warcry. It wasn't "Skol" or "Cheers" or "Here, here" if you knew what was what; it was "Huzzah". Most fashionable dinners had at least twenty courses, but the ladies didn't eat them. It was a whispered instruction among the ladies that they should eat before the dinner, so they could gracefully decline to gobble up goodies, and spend their time in gay conversation or waiting to be asked to dance. Drinking and eating, especially drinking, was for the men at the party, although naturally the many courses of the banquet were put in front of the ladies to be airily ignored. When George Washington was present as he often was, or even La Rochfoucault himself, it was important to remember every spoken word.
And, you know, it worked. When these important people went back home, they took the customs of the Republican Court with them. The American diplomatic corps found the equivalent of minor-league training for their efforts on behalf of the country abroad. Politics was easier if you personally knew your adversaries as well as your allies. The persistence of the same family names in the Social Register, the lists of The Four Hundred and other compilations of high society show that Anne Bingham and Elizabeth Powel did indeed know what they were doing, and for that matter, so did George Washington. If anyone else had been at the top of this heap, Thomas Jefferson stood ready to attack with all his might.
But he and even Patrick Henry didn't dare attack Washington. The aristocrats of Old Europe probably did sneer at this amateur effort, and in some circles still, do. But the inability of absolutely any other group of nations, whether European, Asian or South American, to unite peacefully is a thumb in the eye of anyone who mocks George Washington's little Philadelphia creation. And to think it all began right here, right here in the Powel House, right here in the dining room on the second floor. For that, folks, one thunderous "Huzzah!"
|A Portrait of Elizabeth Willing Powell: 1743-1830 David W. Maxey ISBN-13: 978-0871699640||Amazon|
In the early years of the 21st Century, Ireland lowered taxes on corporate profits to a 12.5% rate, far lower than neighboring countries. Whatever else it did, it promptly encouraged corporations in Germany, Denmark, the United Kingdom, and other neighbors -- to move headquarters to Ireland where taxes were so low. Ireland is primarily rural, and a housing shortage developed in the cities as workers migrated to take advantage of the new jobs. Home prices went through the roof, mortgage applications overwhelmed local banks, who promptly re-sold mortgages to foreign banks. Sound familiar? It caused a housing bubble and then a horrendous international financial crisis. The European Union is financially and politically strained by the consequences and threatened to break apart over it.
That sounds pretty bad and should be a lesson to others. What Canada and a number of the individual United States got out of it was mainly this: if you lower corporation taxes, it causes prosperity. And so it might if politicians would do it gradually and moderately. Gradually and moderately are unfamiliar words in politics. Furthermore, there has long been a fundamental unfairness in taxing corporate profits twice -- once when the profits are made, and a second time when dividends are paid to shareholders. But it is obviously dangerous business, particularly when the governments involved are inexperienced. Canadians started talking about lowering their taxes to 16.5%, and no one could say whether that is a safe level or not. Within weeks, twenty-nine states with Republican governors were sending up trial balloons about joining this movement, and Governor Mitch Daniels of Indiana was much in demand as a consultant, and maybe a Presidential candidate, because Indiana had lowered corporate taxation some time ago, with favorable results.
This was exactly the sort of behavior James Madison had in mind when he designed the United States Constitution; it gave the people a way of disciplining overbearing state governments. Raise our taxes, and we will move. So there are strong arguments that these governors are approaching the right thing, and equally strong indications that everybody had better be plenty careful how this is approached.
The basic idea is good; double taxation should stop, and there is nothing in Madison's Constitution to prevent the Governors from doing what they say they would like to do. So how's this for a suggestion: if this movement gets started, let's take the opportunity to reduce all corporate income tax to zero. If everybody has the same zero rate, the incentive to migrate will disappear, and that's a good thing.
But if a major revenue source for the states disappears, what will take its place? At that moment of what would look like a crisis, it would be time for a national reconsideration and revision of the tax codes. And that would be an even more desirable outcome, provided it is done in an orderly and sensible way.
|One Big Family|
The Franklin Inn Club meets every Monday morning to discuss the news, and recently it discussed the upcoming local political campaign. The discussion went on for fifteen minutes before a newcomer asked if we were talking about the primary or the general election. The question was met with broad smiles all around because of course, we were talking about the primary. Voter registration is 6:1 in favor of the Democrats in Philadelphia, so the general election is just a required formality. The election, that is, consists only of the Democrat primary; election of the Democrat nominee in the general election is a foregone conclusion. Someone idly remarked on the number of politicians who are blood relatives of other politicians, someone else said that was true of union officers, too. So, skipping from the inside baseball of the election, we took a little time to discuss the anatomy of an urban political machine.
The first step in consolidating control of a city by a political machine is to eliminate the issue of the general election by making the other party's chances seem hopeless. That converts an election which typically turns out 40% of the voters into an exclusively primary election, turning out 20% of the voters, or even less in an off-year. In some "safe" districts a winner needs far less than 10% of the eligible voters to win.
The second step is to run as a prominent member of a local ethnic or religious group, preferably the largest of such groups within the district. If possible, an election is almost assured by being the sole candidate associated with the largest ethnic group. Here's where family connections work for you. If your father held the same seat, or some other family member had been prominent in the district, it helps assure everybody that you are really an ethnic member and not just someone whose name sounds as though it would be. Your relative will know who is important in locally local politics, the members of large families or people are known to be the "go-to guy".
Assembling all that, the final step is to get everyone else who is a member of the ethnic group to drop out of the primary, and to encourage other ethnic groups to field as many candidates as possible, splitting up their vote. Getting other members of your religious group to drop out, consists of having your relative approach them and tell them to wait their turn. The implicit promise underneath that advice is probably next to worthless, unless it is specific and witnessed, and the other fellow's ability to deliver it is credible. If all else fails, the resistant opponent is muscled in some way, verbally at first, and then increasingly threatening. The consequence of this ethnic/religious influence is more involvement in government by clergy than is healthy for either one of them. Now, that's about all there is to achieving permanent incumbency, but the minority party should be mentioned, as well as the flow of money.
It quite often happens that the minority party in the big city, hopeless in its own election chances, finds itself with a Governor and/or Legislature of their party. The patronage of state jobs becomes available to the foot soldiers who have no chance of local election. Much of the wrangling within state legislatures revolves around whether appointive patronage jobs should be lodged in state agencies, or local ones; at the moment, the Parking Authority and the Port Authorities figure prominently as jobs for which a local Republican could aspire. The coin of this trade is maintaining influence in the state nominating process and paying off with increased voter turn-out in elections which have no local effect but may be important at the state or national level. Since party dominance at state and national levels changes frequently, the local machine finds it useful to continue this system. Where they have nothing to lose in local elections, they may even encourage it.
Money is the mother's milk of politics. Except for safe districts no one can get elected without it. And various degrees of corruption provide money to be "spread around" the clubhouse, sometimes to induce people to drop out of primary races, sometimes to console "sacrifice" candidates who run hopeless campaigns just to make the party look good, and sometimes just to enrich the undeserving. The politically connected parts of the legal profession participate a good deal in the flow of funds, sometimes in order to get government legal work, sometimes to obtain judgeships, sometimes to launder the money for clients. One particularly lurid story circulates that professional sports teams are expected to make seven-figure contributions in return for lavish new stadium construction, from which they, in turn, are able to generate various sorts of compensating revenue.
But, as the old story goes, if you eat lunch with a tiger, the tiger eats last.
|Constitutional Convention 1787|
TRUE, George Washington was the presiding officer of the Constitutional Convention. But Pennsylvania was the host delegation, so the role of presiding host should have fallen to Benjamin Franklin, the President of Pennsylvania. However, Franklin was getting elderly and turned the job over to Robert Morris, who among other things was rich enough to host some necessary parties. The rules of decorum at that time thus kept Washington and Morris out of the floor debates. The proceedings were, in any event, kept the secret, so occasional frowns or encouraging smiles are not recorded for history.
But Morris had been an active debater in the Assembly and other meetings, so he knew enough to line up a consensus in advance for the matters he thought were essential. Obviously, Morris was strongly in favor of giving the national government power to levy taxes for defense purposes, and Washington whose troops had suffered severely from the inability of the Continental Congress to pay them also regarded this taxing power as the central reason for changing the rules. By making it the central argument for holding the convention at all, Washington, Franklin, and Morris had made taxation power a foregone conclusion. And by giving them what they wanted from the outset, the rest of the convention was in a position to do almost anything else it wanted without open comment from the Titans. The sense of this trade-off was captured by Gouverneur Morris, the editor of the Constitution, in Article I, Section 8:
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;This formulation had the effect of greatly empowering James Madison, the only participant who had studied the inside details intensively and cared about every comma. It also encourages the military to believe that federal taxation was mainly their entitlement, whereas those whose main goals are defined as "the general Welfare" tend to regard defense spending as an unnecessary deduction from their share.
|Pawn Broker Sign|
Most of the convention delegates had experience with state legislatures, and Franklin and Morris had spent decades struggling with the weaknesses of legislators. A wink or a quip in a tavern was as good as an hour's speech for reminding the delegates what they already knew about human nature. What was designed as a dual system of powers of taxation, with federal oversight of balanced state budgets combined with federal power to tax on its own in emergencies or unforeseen situations. Since the members of the first few congresses after 1789 were largely the same people as the members of the constitutional convention, many details of this balance were worked out over a few following years. State powers to tax and borrow were tightly constrained, only the federal government could tax and borrow without limit. Since government borrowing is merely the power to defer taxes until later, the borrower of last resort was the U.S. Congress, alone empowered to encumber the wealth of the whole nation in a federal pawn shop window called the funded National Debt. For almost two centuries, this pawn shop window seemed able to support any imaginable expense. Today, we monitor this as the ratio of national debt to Gross Domestic Product (GDP), and we now have a clearer idea what level of that ratio flirts with hopeless inability to pay the federal government's debt. The experts say it's close to a 60% ratio, and unfortunately, almost every nation on earth now exceeds that limit. The system continues to lack an unchallenged definition of its limit, but the system is nevertheless still Morris's system, wrapped in a mountain of descriptive detail by Alexander Hamilton. If a nation borrows more than that and clearly will never repay it, that nation is to some degree a slave to its creditors, with war its only hope if creditors are unrelenting. Perhaps another way to refine the thought is to say that if the nation wishes to mortgage everything it owns down to the last shoe button, the creditors will only accept additional debt if it is proposed by someone with the power to pawn the last shoe button. To foreigners, the proof of who has what power is much more certain if written down. Morris's protege Alexander Hamilton went even further: "credit" is established when creditors can see that somebody is in the habit of getting the nation's bills paid, and "credit" is injured whenever anyone in charge, welches.
For many decades, at least since the Second World War, the Northeastern part of the country has been losing population. And business, and wealth. In recent years, New Jersey has been the state with the greatest net loss, and the Governor who is making the greatest fuss about it. Statisticians have raised this observation to the level of proven fact, although lots of people are even moving into New Jersey at the same time. This is a net figure, and it remains debatable what sort of person you would want to gain, hate to lose; so it's hard for politicians to be certain whether New Jersey's demographic shifts are currently a good thing or a bad thing.
Take the prison population, for example. Most people in New Jersey would think it was a good thing if the felons all moved to some other state because it would imply less crime and law enforcement costs. But one of the major recent causes of a decline in violent crime seems to be the universal presence of a portable telephone in everyone's pocket. Just let someone yell, "Stick 'em up!" loud enough, and thirty cell phones are apt to emerge, all dialing 911. On the other hand, cell phones are the universal communication vehicle for sales of illicit drugs and other illegal recreations, and the increase in automobile accidents is a serious business for inattentive drivers. Add to this confusion the data that capital punishment is more expensive for the State than incarceration is, and you start to see the near futility of knowing what is best to have more, or less, of.
What the Governor and his Department of Treasury mostly want to know is whether certain taxes end up producing a good net revenue for the State. That is, whether more revenue is produced by raising certain taxes more than others, or whether some taxes are a big component of the Laffer Curve, causing revenue to be lost by driving business, or business owners, out of state, in spite of the immediate revenue gain. The studies which have been done are fairly conclusive that executives tend to be most outraged by property taxes, since they have a hidden effect on the sale price of the house, and the amount of money available for school improvements. At least at present levels, a Governor is better off taking abuse for raising income or sales taxes, even though the apparent tax revenue might be the same as a rise in property taxes. Since property taxes are mostly set by a local municipal government, while sales and income taxes are usually set by state governments, a decision to raise one sort of tax or another can have unexpected consequences, or require obscure manipulations to accomplish.
Some politicians who believe their voting strength does not lie in the middle class, would normally want to hold up property values, not taxes because the data show that higher home prices drive away from the middle class and in certain circumstances are positively attractive to wealthy ones. Higher prices appeal to home sellers, at least up to a point. Wealthier people who are buying houses are likely to have an old one to sell; that's less true of first-time home buyers or people presently renting. Certain issues can even be reduced to rough formulas: a 1% increase in income tax would cause a 1% loss of population, but a 5% loss of people earning more than $125,000. A $10,000 increase in average home prices, on the other hand, causes a net loss of population, but mostly those with lower income. One important feature of tinkering with average home prices and property taxes is that these effects are "durable" -- they do not fade away over time.
New Jersey is financially a bad state to die in, but the decision to move to Delaware, Florida or Texas is often made over a long period of years in advance of actually doing it. It has been hard to compile statistics relating changes in inheritance tax law to net migration of retirees and to present such dry data in an effective manner to counteract the grumblings that rich people are undeserving of tax relief, or dead people are unable to complain. But rich old folks are very likely to own or control businesses, and if you drive them out of state, you may drive away a considerably larger amount of taxation relating to the business in other ways. This is the underlying complaint of Unions about Jobs, Jobs, Jobs; but state revenue also relates to sales taxes of the business, business taxes, employee taxes, real estate taxes on the business property, etc, etc. Sometimes these effects are more noticeable in the region they affect; the huge population growth of the Lehigh Valley in recent years is mainly composed of former New Jersey suburbanites, who formerly earned their income in New York. The taxes of three different states interact, in places like that.
The audience of a group I recently attended contained a great many people who make a living trying to persuade businesses to move into one of the three Quaker states of the Delaware Valley. The side-bar badinage of these people tended to agree that many of the decisions to relocate a business are based on seemingly capricious thinking. The decision to consider relocation to the Delaware Valley is often prompted by such things as the wife of an executive having gone to school on the Main Line. Following that, the professional persuaders move in with data about tax rates, average home prices, and the ranking of local school quality by analysts. Having compiled a short list of places to consider by this process, it all seemingly comes back to the same capriciousness. The wife of the C.E.O. had a roommate at college who still lives in the area. And she says the Philadelphia Flower Show is the best there is. So, fourteen thousand employees soon get a letter, telling them we are going to move.
And, the poor Governor is left out of the real decision-making entirely, except to the degree he recognizes that home property taxes have the largest provable effect on personal relocation. And lowering the corporate income tax has the biggest demonstrable effect on moving businesses. But the largest un-provable effect is dependent on the comparative level of the state's inheritance tax.
NEARLY every student of government agrees, the state government is the weakest part of the American system. Almost every academic or federal congressman, at least, seems to hold that belief, while almost any lawyer would prefer to have his case in Federal court rather than before a state judge. Although the followers of Thomas Jefferson kept the nation in an uproar for forty years pursuing his notion of government identical with the will of the people, the public opinion he prized nevertheless remains scornful of state government. Such scorn by itself can undermine legislative quality, creating a destructive cycle.
Students of government point to instability and unpredictability as main features of concern about state government. The legal profession values a central principle, called stare decisis: Leave the Law Alone. Stability, or order is desired so highly that dictatorship, corruption, and poverty may be tolerated in order to achieve it. Conversely, an inability to predict what is coming next is highly destabilizing, a sign of amateurism at the controls. Any decision is better than no decision, even a bad decision is better than no decision. The public hesitates to act in the face of indecisive governance, and dynamism drains from the environment. Most of the time it doesn't make much difference what a rule says as long as it is emphatic and prompt. And it's usually the case that bad decisions are quickly reversed. Test it yourself: how much difference does it make whether a one-way street runs East or West? But it would make a considerable difference if almost any street changed Eastward to Westward to Eastward again, several times capriciously. Suppose someone did make a bad mistake: Eastward to Westward and back to Eastward again. Everyone can now see that Westward was a dumb idea, you bonehead. It will be a very long time before anyone tries that, again.
A second general characteristic of state government is the location in a small remote town. The capital of Michigan is in Lansing, not Detroit. In New York, it is in Albany, not New York City, and in Pennsylvania, it moved from Philadelphia to Harrisburg. Even in little Delaware, it is in Dover, in Maryland, it is in Annapolis rather than Baltimore. And so through most of the fifty states, we see the same pattern. No doubt it could be argued: getting away from big-city bosses and political machines is positive, and stretching a network of highways through the open countryside to the new capital is a source of real estate development for the state. But it definitely creates weakness of the governing system to locate it in towns that have little newspaper coverage, no think tanks, few universities, and even poor airports, school systems, museums, and civil society. These are generally one-industry towns, where the children of the bureaucracy all go to school with each other, along with the offspring of lobbyists. Voices in the past have been raised against the development of a ruling class, as might have been seen in Potsdam outside of Berlin and similar political suburbs. But we have just as surely developed a bureaucratic subclass in Bethesda, Maryland and Alexandria, Virginia. No doubt there are many other similar clusters, in other states. Where the children of bureaucrats are clustered in the schools near the Washington Post and the National Journal it can be argued they know the inside game of politics, as well as the children of Boston, know the inside baseball of the Red Sox, and there is a certain value to developing such a political artisan class. But in the vast majority of the country, the dominant problem is that the voters of the state have not the faintest idea of how their state government is functioning. The children of bureaucrats may still learn at the dinner table how to adopt "Yes, Minister" behavior or how to find lifetime bureaucratic jobs with accidentally high fringe benefits. The big flaw is the rest of the state does not realize the smallest part of how prevalent such behavior is in the capital. If the politician who is caught in a scandal is largely unknown to the general public, it is an advantage to the political class. With less notoriety, there is less scandal, possibly even lighter punishment from judges he has been involved in appointing. Rising above this sort of sorry behavior, the quality of legislation is surely diminished when there is diminished fame for doing a good job, diminished scorn for incompetence.
To a certain extent, this pressure for mediocrity is augmented by the reduced importance of the subject material. The federal government is involved in foreign policy and monetary issues Constitutionally forbidden to the state legislature. Even at the bottom of the hierarchy of public notice, the activities of mayors and city councils have a more direct effect of the lives of the local voter than state government does, with importance shaved off at both the top and the bottom. Such activities really can possibly afford to be relegated to some rural small town with nothing to do except play poker and drink in the bar of the local hotel; it's a question which is a cause, which is the effect. The Constitution provides that the Federal government shall be limited to a dozen specified activities, while everything else is governed by the states. Unfortunately, two hundred years of chipping away at the wall separating two governments of limited powers have left the states with little scope to govern anything substantive except the insurance industry. That does not prevent most state governments from considering more than two thousand bills a session, but these are matters of little import, boring, boring.
The Progressive Movement of the early Twentieth century saw much the same problems, being handled by much the same sort of people; but they over-reacted to it. Like most reform movements, the Progressives wanted to make a big splash and then go home. A century later, it is difficult to assess how outrageously corrupt the Senatorial process may or may not have been at that time in the past. Somehow, the public became convinced the U.S. Senate was a terribly rotten organization because of the terribly rotten selection system for U.S. Senators. Consequently, the Seventeenth Amendment passed with little fanfare, taking the selection process away from "the states" and giving it to a statewide popular election. In states with large urban political machines, this change meant giving the nominating process to big-city bosses, taking it away from the legislatures. That is definitely a distinction without much difference. Most big-city political bosses are content to select obedient hacks for nomination to the legislature, but this is the source of most rotten boroughs, gerrymandering, corruption, and mediocrity. In the areas of rural machine politics, the boss himself is more commonly attracted to the appointive legislative jobs. In New Jersey, the election law prohibits more than small campaign contributions to legislators but permits unlimited contributions to the county boss. Either way, the progressive reform of 1913 has not had much progressive effect. One thing is very certain. When the method of selection of the state's U.S. Senator is left to the legislature, the resulting Senator is pretty certain to be a current member of the Legislature. And in the instant you aspire to be U.S. Senator, it becomes very clear you will greatly enhance your chances if you first run for the legislature. There were once likely to be half a dozen senatorial aspirants within the Legislature at any one time, so there was an appreciable improvement in the quality of the Legislatures. True, there was probably more grand-standing and maybe even vote-swapping in return for assistance on the Senatorial seat selection. But there was also much more attention paid in return to the state's interests, by the U.S. Senate. The state's voice on the national scene was considerably louder. The value of a legislative seat and the later experience it provided were much enhanced by possessing the power of selecting a U.S. Senator.
A measured assessment of the effects of the Seventeenth Amendment is long overdue. My own view is that ripping the selection process away from the state legislatures and substituting a second popularly elected national legislative house, was both an over-reaction and a careless gesture without much improvement. Because vested interests have been created, it is now nearly useless to ask the present Congress to study the matter. We have to hope that some rich private citizen will see the need for a serious study of these issues, and both fund the effort as well as leave it alone. If it gets captured by ideologues, it will require a second study, or maybe even a third.
And finally, we get to Earl Warren. former governor of California, and President Eisenhower's choice for Chief Justice of the Supreme Court of the United States. Eisenhower later once referred to the appointment as the worst decision he ever made. Two decisions are said to have been his pets: Baker v. Carr and Reynolds v. Sims. Prior to these two decisions, it was really only possible to gerrymander Congress and the fifty state Legislatures. The U.S. Senate and the various state Senates were elected by geographic boundaries, and couldn't be gerrymandered. Tracing back to a corridor conversation between John Dickinson and James Madison, Dickinson had caucused with the other small states and was in a position to block almost any Constitutional Provision at the Convention. He used words to the effect of, "Do you want a Constitution, or don't you?" and went on to describe his total unwillingness to allow big states to dominate small ones. Out of this, Ben Franklin cobbled a compromise of a two-house Legislative Branch. To pass, any legislation would require the approval of both houses. The House of Representatives would have proportional representation, while in the Senate each state would have two senators, regardless of its population. Eventually, almost every state Legislative branch followed this pattern, although it was not a provision of the Constitution.
The hidden dissention in 1789 was over slavery, but Dickinson was a shrewd and experienced lawyer. He knew human nature, and the best example of the power of his insight has later emerged as California has become the largest state. Every new insurance design first seeks to conform to California laws, because it's expensive to launch a new project, and you might as well assure yourself of conforming to the rules of the largest market, first. The smallest state, Delaware, was not about to be pushed around like that, even on many unrelated issues. But centuries later, Earl Warren had learned the same lesson in reverse and lunged for it when he became Chief Justice. Using the argument of "equal justice", he forced 49 state Senates to adopt proportional representation, just like the other house in their branch. New Jersey, which I know best, is typical in being forced by this decision to change its Senate from one vote per county to voting by population. The subtlety was that both houses of state legislatures became dominated by big-city machines and hence were capable of being gerrymandered. They thus gained control of the nomination process, and gerrymandering nation-wide has assumed the posture of machine politics dominating the selection of candidates. It's certainly true that in the Pennsylvania legislative process, you can regularly observe party hacks drive up, and vote on the floor in accordance with a little card which the "leadership" hands them as they step on the floor. The beauty part of this is that decades later, most citizens haven't a clue what had happened.
JOHN Dickinson had been highly critical of England's treatment of its colonies. As early as 1768 he had written a book called Letters of a Pennsylvania Farmer which is credited with strongly influencing the colonies in the direction of resistance to the British Ministry. When it came time to write the Articles of Confederation, Dickinson was the lawyer selected for the task. His good friend Robert Morris had been less outspoken in opposition to the Ministry's behavior, quite possibly because he was adept at finding workarounds for his own personal business problems. But possibly he was merely maintaining an ambiguous negotiating posture, since in a hotly contested election with this as the main issue, Morris was elected by both sides in the argument. When July 4, 1776, forced the issue both Dickinson and Morris had refused to sign the Declaration, but within a few months both of them were actively fighting for the Rebellion. The truest test of their evolving attitudes might have emerged when Lord North sent the Earl of Carlisle as an emissary after Burgoyne's defeat at Saratoga, offering peace with a sort of commonwealth status for the colonies. Not much is written about this curious episode, leaving it unclear whether the British were serious, and even if they were, whether the Americans understood the offer as serious. On the surface, the British offer conceded taxation with representation as the rebellion had been demanding. But it was rejected by Gouverneur Morris acting for -- who remains unclear. It seems possible the British were exploring the true feelings of people like Dickinson and Robert Morris but were disappointed. The earlier treatment of Ireland after it had agreed to a similar half-hearted autonomy did leave British sincerity in legitimate doubt.
The thirteen colonies had united to fight the British King, but many of them were reluctant to unite for any other time or purpose. Rhode Island was perhaps the extreme example of this view of what Independence was supposed to mean, but the feeling existed to some degree in many colonies. Concern for the power of this feeling of tentativeness may have contributed an important reason the Articles placed heavy emphasis on declaring the document to represent a perpetual arrangement. Recognition of the weakness of this intent may have been an important reason why George Washington was later willing to sweep the issue aside, even though he of all people was most concerned to avoid the appearance of acting as an arbitrary king. For these and other reasons mainly revolving around state boundary disputes, the Articles remained unratified for years. Finally, in 1781 Robert Morris became convinced that failure to ratify was encouraging the states not to cooperate, and successfully pushed ratification through its steps. At that time, Morris was effectively running the country, even providing his own credit and funds to do it. People were reluctant to oppose his wishes, but they were also unwilling to provide the taxes, supplies, and troops that Morris imagined were being blocked by failure to ratify. Ratification of the Articles accomplished very little except to convince Morris: the Articles were flawed and must be replaced with something conferring more central power.
|The Goal: 1787|
Little is known about the evolution of Constitutional thought in Morris' mind between 1781 and the Constitutional Convention in 1787, although a great deal is known about his other numerous activities. It is clear, however, that his experience with the recalcitrant Pennsylvania Legislature had been dismal, while he came to see the one insurmountable flaw in the current Federal government was its inability to levy taxes and consequently, to service national debt. The states were able to levy taxes under the Articles but erratic in doing so, resorting to paper money inflation at the first sign of tax resistance. In Morris' view, the key to the effective government was to reverse the situation; let the national government tax, let the states spend. The key to such rearrangement would be to permit the national government to spend on a very limited list of vital purposes, but bedazzle the states with a substantially unlimited shopping list if they thought they could afford it. As the accounts to pay for the Revolutionary War totaled up, it was apparent that the National Government had twice as much debt as the states. Therefore it would at most, need twice the state taxing power to service such a debt; presumably, wars would be infrequent and it would be less than that. Pay this one off, and potentially the need for future federal spending would be small. Indeed, under the presidency of James Monroe, the national debt was completely paid off, although briefly. It was almost as if Robert Morris and his pupil Alexander Hamilton had a crystal ball.
|Decline and Fall, Anyone?|
Robert Morris was brilliant and had six years to fashion his strategy, but he also had some help. For one thing, George Washington lived next door much of that time. By then, almost no one dared confront Washington. Adam Smith had written his book The Wealth of Nations in 1776, and Morris gave this extraordinary work as presents to his friends. Morris had corresponded with Necker, the genius financier of France, and through his good friend Benjamin Franklin, gathered insights from the rather advanced British national finance. And James Madison brought in scholarship about politics and statecraft accumulated by Witherspoon, Hume and the Scottish enlightenment. The year 1776 was a remarkable moment for new ideas. In that year, Edward Gibbon also published the first volume of The History of the Decline and Fall of the Roman Empire. The warning behind that important book had an important impact on the minds of important thinkers of the era, too.
Once you grasped all the central ideas, in this environment the resulting strategy almost worked itself out.
President George W. Bush nominated John Roberts to be Chief Justice of the U.S. Supreme Court in 2005. Since then, the Chief's administrative changes to the court and the whole court system have been slow but methodical. To the extent the Chief Justice has control of the matter, Roberts has been taking steps which make the Court into a more thoughtful branch of the Federal Government, ultimately making it more powerful. His first step was to reduce the number of cases considered each year, constraining them to conflicts between lower jurisdictions, unless otherwise mandated. This year, the number of cases heard is about eighty, or only half of the previous numbers. The policy lets unconflicting Appellate judgments stand. A second court must disagree with the first one, for the Supreme Court to enter the case.
The so-called Obamacare case, (NFIB v. Sebelius), meets this conflict-between-jurisdictions standard, but is notable for other innovations. The case was nationally broadcast as a live slide show. It heard arguments lasting three days instead of the usual single hour, and of course, it broke new substantive ground in a case of national interest. The decisions will now get more press attention; but this relatively rapid evolution toward a national debating contest, through modified Court procedure, is more important than it looks. It would be saying too much to claim the whole nation now fully understands its Constitution of enumerated powers, but surely the citizens who have only recently learned something about it must number in the millions. Before this case, many law school graduates might have had difficulty describing the design of the federalized system in a plausible dinner-table conversation. It's not yet clear where John Roberts is going, but he is surely trying to bring the public along with him.
During the semi-televised arguments, I was at first impressed with the rapid-fire exchanges between Justices and litigators about the operation of health insurance. Some people are born with high-speed brains and high-speed speech apparatus; no doubt, such people are sought after to represent others in court. But after practicing Medicine for sixty years and writing books about health insurance, I recognized that several rapid-fire responses by the attorneys were confident but off-target. Frankly, if you only have a few minutes but many points to make, and have to say them before someone interrupts, you would almost have to be a circus freak to manage. This is quite unnecessary, no matter how entertaining it may be to other lawyers. There seems no reason why the questions cannot be submitted in writing, sometimes employing experts on the specific points, and allowing enough time without interruption to devise a thoughtful answer. At present, it seems to matter more what the litigating attorney will agree to, than what is the fact. The outcome of cutting a litigant off after he says, "Yes, your honor, but.." is now only to establish whether both sides agree on a point; just why they agree or disagree is not even sought, let alone disregarded. It would seem useful to know Justice Thomas' reasons for abstaining from questions during oral arguments, for a different sort of example. So, it is easy to imagine that John Roberts has some thoughtful goals in modifying Supreme Court traditions, and equally understandable if jurists of this distinction become irritated by suggestions from the peanut gallery. It is thus fitting that we all hold back and first watch where the varsity means to take us. But allowing the public to express an opinion, is not the same as lobbying for it.
The Obamacare Act was about 2600 pages long, and two years after the President signed the bill, more than half of the necessary regulations remain to be written. The Law is "not severable", which is to say individual pieces of it cannot be attacked in court, without potentially upsetting decisions made on other portions. As a consequence, both the good and bad parts could endure for a long time to come. Or, the whole thing could suddenly sink from sight, relatively quickly. If the Justices can tolerate it, this legislation with many "moving parts" could be in the courts for a long time to come. So, Justices will then find the rule Roberts has made, of only accepting conflicts between the jurisdictions, protects their time and patience. But in doing so it will shift most final judgments into the hands of the lower, appellate courts. The legal profession will like this quite a lot. It will be like the gratifying situation said to prevail when a commanding General decides to retire -- everybody down the line could get promoted one notch.
By artfully selecting cases to argue, there were here four points open to the decision. Only two of them eventually had bearing on the final outcome of this case, but the whole issue is not necessarily concluded. The first decision got the most attention, deciding that the penalty for not having health insurance could be read as just a tax, and therefore was legal for Congress to use as a Constitutional basis for making health insurance mandatory, as Roberts declared the "Commerce clause" was not. The distinguishing feature of a Congressional exaction which is "just a tax" appears to be whether it exceeds the expenditure intended; if it exceeds the expenditure it would presumably be punitive. Nothing had seemed more important to the Founding Fathers than to expand the ability of the national government to impose taxes to service war debts. To truncate this wish of George Washington and Robert Morris into a short-cut, "Congress has the right to tax", or conversely to expand its confining language into "Congress has the right to tax in order to make private health insurance compulsory" just points up that the only real purpose of taxes in Washington's day was to wage war, and that the purpose of allowable taxes probably would have been defined if other purposes had been foreseen. Someone could usefully point out that what the Constitution really means is that Congress has the right to tax for "defense and the general welfare", and challenge anyone to argue otherwise. One sees the clever hand of Gouverneur Morris fuzzing up that argument; are we to ignore the fungibility of money and ask whether Congress may spend money on the general welfare only if it is general? How about earmarks, for example, are they all for the general welfare?
However, to turn a blind eye toward interesting issues is apparently a price that must be paid for obtaining the right for the Chief Justice to write the majority opinion, which eventually slips in some language (in legal language, an obiter dictum) to the effect that , of course, you couldn't use the Commerce Clause to do that. Getting Justice Ruth Ginsburg to sign that will eventually sound like the box John Marshall constructed in Marbury v. Madison. If that obiter dictum is as heat-resistant as the opinions of the first Justice Roberts in Franklin Roosevelt's court-packing effort, then the Commerce Clause is likely to be off-limits for a long time. Of course, if Chief Justice Roberts had joined the other four conservatives he would still have been able to write the majority opinion, but in the opposite direction. Except of course for that inevitable political accusation: There you go again, you 5-4 conservatives.
The second decision, in this case, is the sleeper. Congressional managers in charge of writing the bill had finally decided they had no way to cover 40 million uninsured people, except by diverting fifteen million of them into what is acknowledged to be the absolutely worst part of the American medical system, the state Medicaid programs. And because many States Rights advocates were in charge of state Governor's offices, the Congressional bill-writers added what is now a fairly familiar prod to cooperation. That is, if a state refuses to take the extra Medicaid patients, it will lose all federal funds for existing clients of state Medicaid. This sort of coercive provision has become so standard in highway bills and other federal programs operating at the state level, that it was largely unnoticed in the 48 hours the Congress was given to examine 2600 pages of legislative provisions. This, however, is blackmail, said John Roberts, quite unallowable under the defined separation of powers of the Constitution, between the state and federal levels of government. Furthermore, if some state decides to accept the penalty, it could close the existing program for the poor and accept the subsidy for the middle class, thus enhancing their revenues and reducing their obligations to the poor. Congress must now devise new strategies for suggesting federal programs to the states, and probably will do so. But the financial blackmail strategy now has a permanent black eye, with a skeptical public eye on the alert for it. The ironic conclusion of all this comes from the Congressional Budget Office, which predicts we will end up with 30 million uninsured persons, anyway.
What's awkward about this was immediately pointed out by attorney Richard Epstein: it ignores the century-old precedent set by Chief Justice Taft. Writing about a Child Labor law, Taft created a Supreme Court precedent that the Constitutional taxing power of the national government may not be used to implement what cannot be implemented directly. We can now see an example within the borders of a single case, where the Constitutional taxing power provision is used to indicate an otherwise impermissible Obamacare, and a few pages later its use is forbidden in the case of Medicaid in order to accomplish a forbidden coercion. Locating the two issues in the same case decision helps make the distinction between using the taxing power for revenue, and using it to coerce obedience; the distinction grows as the magnitude of the tax grows, particularly after it exceeds the intended government expenditure. What is not emphasized is the basis for Chief Justice Roberts reversing the precedent set by Chief Justice Taft on the same topic a century earlier. He did it with the Obiter dictum, and yet he didn't exactly do it. The four liberal Justices who co-signed the decision are not in a position to dispute it, while the four conservative Justices may not wish to. In either direction, however, the vote of the current Chief Justice appears to be both decisive and subtle.
It remains to be seen whether the 'tax, not commerce' strategy was clever. If the tax approach proves to be durable, it presumably extends to a wide range of legislation since Roosevelt's New Deal. Already, its awkward features have emerged in renaming portions of Obamacare into Chapter 48 of Subtitle D of the Internal Revenue Code of 1986 (!). Any law student who tries to look that up is going to have a frustrating time. But on the other hand, sometimes you win by losing. If it should somehow not be a tax, it has already been excluded from the Commerce Clause, so it has no hook left in the Constitution on which to hang it. There's something in this whole wrangle which resembles the position of Germany and Japan after the Second World War. In spite of losing that war, those two nations seem to have prospered better than England and Russia, who lost their empires but are said to have won the war .
The two highest achievements of James Madison, had been and still remain, the writing of the Bill of Rights, and acting as a close collaborator with George Washington in fleshing out the role of the President in the new government. The Ninth and Tenth Amendments made it clear that the federal government was to be constrained to a limited and enumerated set of powers, while all other activities belonged to the states. This was already clear enough in the main text of the Constitution, which Madison also dominated after close consultation with Washington before the Constitutional Convention. So he had battled and successfully negotiated one matter twice, before the most powerful and distinguished assemblies in the nation. As to the second matter, circumstances had promoted a shy young bookworm into the role of preceptor to the most famous man in America. In the earliest days of the new republic, certainly during the first year of it, Washington and Madison worked closely together in defining the role of the Presidency.
During the first weeks of that exploratory period, Washington induced Congress to create a cabinet and the first four cabinet positions, even though the Constitution did not mention cabinets. It all was explained as an "implicit power", inherently necessary for the functioning of the Executive branch. Soon afterward, Alexander Hamilton as Secretary of the Treasury proposed the creation of a national bank. Madison and his lifelong friend Thomas Jefferson were bitterly opposed, using the argument that creating banks was not one of the enumerated powers granted by the Constitution. Hamilton's reply was that creating a bank was an "implicit power" since it was necessary for running the federal government. Of course, Hamilton and Jefferson both had other unspoken motives for their position: for and against promoting urban vs. rural power, for and against the industrialization of the national economy, and dominating the states in matters of currency and financial leadership. It empowered a national rather than a confederated economy.
For Madison, the legalism probably carried considerably more weight than it did for Jefferson and Hamilton because it demonstrated the enduring consequences of being vague about the boundaries of any constitutional restriction. If this loophole got firmly established, it might reduce the whole federal system to a laughingstock. In order to promote the "general welfare", anything at all could be called an implicit power, and both separation of powers and enumerating federal powers would soon become quaint flourishes. The whole Constitution might fall apart in endless debates. On a personal level, Madison's highest achievements would have to be supplanted by something more practical. Besides which, Madison was a Virginian, a rich slave-holding farmer, and a young politician, seemingly on the verge of a promising career which might easily lead to the presidency for himself. Hamilton his most visible opponent, was already proposing a tax on whiskey which would almost surely antagonize farmers to the west, and assuming the Revolutionary debts of the states was equally divisive.
As matters eventually worked out, the main disputants made ostensible constitutional arguments, while the real political dispute would be settled by a political deal struck at a dinner. It traded relocation of the national capital to Virginia, for the assumption of the debts of all states (when Virginia had already paid off its debt.) Location of the capitol opposite George Washington's home at Mt. Vernon also took care of difficulties coming from that direction. By the time the uproar about this arrangement subsided, the precedent for settling the inherent conflict between enforcing Constitutional limitations versus enlarging their boundaries had been set. The most opportune time for stricter interpretation was fading while the most likely advocates of it were restrained by their own example. The negotiation was a little unseemly, and probably encouraged similar decisions to migrate to a less conflicted body, which eventually John Marshall would define as the U.S. Supreme Court.
Those who now look back at the Founding Fathers often fail to account for the aging process during the eleven years between the Declaration of Independence in 1776 to the Constitutional Convention of 1787. The two events took place in the same building, Independence Hall, and many participants of the Convention were fellow Revolutionary War veterans. But there was originally a great social difference between a colonial leader and a teen-aged soldier at the beginning of this period, which tended to seem blurred by the experiences of the war. Someone who fought and was wounded as a common soldier might later grow into the dignity of a former war hero, but underneath this veneer was a very different experience from an early leader of the colonial rebellion, or after the onset of serious hostilities, an older man who seemed eligible to be a Revolutionary officer. The original generation of rebels conspired to restore proper British rights for individual colonies, while the teenager who fought in the Continental Army under his idol George Washington saw himself as fighting for the freedoms of individuals, living in a new nation.
What emerged were two generations of Founding Fathers, one of which was generally an officer fighting for the right of his state to be fairly represented, the other a young common soldier, fighting for the individual right of free speech. One wanted to protect his colonial region's religion, the other wanted the freedom to choose his own religion. Both of them felt entitled to say how things were to be run, but young men eventually become older men. No better example of aging's transformation of attitudes could be found than the life of John Marshall. This teenaged wounded veteran of the Battle of Trenton evolved into Chief Justice of the Supreme Court, the author of a multi-volume biography of George Washington, and almost the last man standing who could be called a Federalist. Other teenaged soldiers took different paths in life.
History belongs to the victor, so it is also important to recollect that almost a third of the colonists had been Tories. In general, the upper crust of society tended to be more loyalist. Thousands of Loyalists fled to Canada, and thousands more fought on the British side. When General Clinton abandoned the occupation of Philadelphia, three thousand Loyalists accompanied him. The loss of these more educated and wealthier citizens and the lowered public profiles of those who remained in America skimmed off a considerable portion of the natural leadership of the colonies. Those young men who were left behind were victors, often exhilarated to discover that if they did not lead, no one would lead.
The embodiment of these population shifts was to be found in state governments with unicameral legislatures, popular election of judges, and weak executives -- all of which have since been repudiated by experience, but all of which reflect a distrust of leaders. Partly this might be attributed to lack of experience, greater reliance on collective government by the herd instinct, the recklessness of youth, and fear that power will eventually return to the hands of those who are educated to handle it. The hostility of the lower classes to those who are better off has many causes, but in this situation, it was promoted by unexpected elevation to leadership, combined with a subsequent determination not to lose power again -- balanced against the rather strong possibility that they would. Add to this the continued influx of immigrants fleeing from foreign oppression, and it is not surprising that the result is an enduring strain of populism stirring up a latent tendency to class warfare. You, too, can be President; but you must fight if you expect to succeed. The former aristocratic attitude was that you are born to rule, as long as you don't do something stupid.
|The Great Courses: History of the United States, 2nd Edition Course #8500: Lecture 14 Creating the Constitution: Aurthor: Allen C. Guelzo: ISBN: 156585763-1||The Great Courses|
|Chief Justice John Marshall|
John Marshall, taking sixteen years to do it, transformed the Constitution internally into the cornerstone of the Rule of Law, making the legal profession its guardian. Nine respected justices now essentially hold lifetime appointments as bodyguards of the structure Marshall designed, with all lawyers acting as lesser officers. Nevertheless, four personal things are important to remember. Marshall had been a Revolutionary soldier, he wrote a five-volume biography of George Washington, he positively hated his first cousin Thomas Jefferson. And his thirty-five-year tenure as the third Chief Justice of the U.S. Supreme Court coincided with some of the dirtiest national politics the nation has ever seen. Marshall's enthronement of Chief Justice control of the federal courts was tolerated because it promoted them both to national power. And when this tough politician had earned the loyalty of both the court system and the legal profession to himself, he transformed the image of the Constitution from a contract between the states into an American Bible for the Rule of Law. Incidentally, he could beat anyone at horseshoes, a game requiring a winner to be both strong and precise. Much of his achievement grows out of three pivotal Supreme Court cases, which today might just as well be regarded as amendments to the Constitution.
In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the Supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the Supreme Court shall have appellate Jurisdiction
|Article 3, Section 2.3|
Marbury v Madison (1803). The first of Marshall's three cornerstone cases involved the Chief Justice himself. After being defeated for reelection to the Presidency in 1800 by Thomas Jefferson, President John Adams hastened to fill up remaining judicial vacancies before Jefferson his successor could be inaugurated, in a maneuver described as "appointing midnight judges". In a sense, Marshall's appointment as Chief Justice had also been in anticipation of the coming eviction of Federalist office holders, so he was himself more or less a midnight judge, destined to become by many years the last Federalist to survive in office. In any event, he was Adams' Secretary of State, soon to be replaced by James Madison, who would then assume the duty to deliver judicial appointment papers to new judges. Marshall was an impassioned Federalist, bitter about the defeat of his party, nursing personal hatred for Jefferson after years of family differences. To say he had a conflict of interest is not only to brush hurriedly by the issue but also to dramatize what loose judicial standards prevailed at the beginning of his three-decade tenure as Chief Justice.
Appointment papers for the midnight judges were completed and lying on the desk of the Secretary of State when the Presidency changed hands from Adams to Jefferson. Had he known what was coming, Secretary of State Marshall would surely have hastened to deliver the papers, but he had not done so. His successor as Secretary of State, James Madison, on the orders from Jefferson, refused to do it, so Marbury sued for a writ of mandamus, or order from a court to deliver the documents. By this time, Marshall was in a new role of presiding over the Supreme Court, fearful to attack Jefferson head on, but nevertheless eager to command the most humiliating obedience from him. Using the technicality (actually, the plain language of the Constitution) that the request was made to the wrong court, mandamus was rejected by Marshall. However, he went on to say in a judicial aside (obiter dictum) that if the right request had come to the U.S. Supreme Court properly , the Court would have approved it. Thus, in one dazzling maneuver at the beginning of his term, Marshall simultaneously asserted the Court's right to review Presidential and Legislative actions, reproved Jefferson for his ignorant conduct, and boxed him into submission by seemingly letting him win a minor case, but one he could be sure would soon have been followed by major ones if the President somehow evaded this decision. Furthermore, he dazzled the legal profession with this tap-dance, guaranteeing their applause by greatly enhancing the status of judges within the Republic, especially compared with the President. And, it should be mentioned, he suppressed public outcry by performing this set of actions in full public view, cloaked within incomprehensible legal garments. The public could see he had done something important, which only lawyers would completely understand. Marshall plainly began his term by demonstrating the full meaning of the rule of law, and his own position astride that law. The main point was that when ordinary judges include offhand commentary in a decision, it might be ignored. But when the Chief Justice of the United States speaking for the majority of his court, makes a legal observation, it would be a brave lawyer indeed who would bring an action in conflict with it. And as for the President and Legislature, Marbury v Madison had also just brushed them aside. It was all done properly, using civil language but deadly logic.
Martin v Hunter's Lessee (1816). This case might be a little more understandable if retitled as "The Heirs of Lord Fairfax v Fairfax County, Virginia". A Virginia law permitting the seizure of Tory property, written decades before the Constitution, asserted its precedence to Federal Law, and therefore its precedence over Federal Law. (To this day, Virginia never quite forgets it was once the largest, richest state, founded nearly two centuries before the Constitution.) Like Marbury v Madison, the case is clouded by Marshall's personal involvement since the Chief Justice had signed a contract with Martin to buy the land himself. This impairment to the case's claim to legal cornerstone status is not entirely annulled by Marshall recusing himself, turning authorship of the opinion over to his faithful disciple Justice Story. Furthermore, the judicial establishment of the principle that an international Treaty (in this case, the Jay Treaty) takes precedence over an Act of Congress is one the nation may still someday come to regret, if movements for "International human rights" and "universal international law" continue to gain popular traction. Such movements are numerous, including international law for the conduct of wars, and the universal Law of the Sea.
The United Nations might now be more of a force if they had not stumbled over the franchise of hundreds of nations, each given an equal vote. To expect the major nations of the Security Council to obey the single-vote mandates of dozens of small African nations is to agree in advance that the UN must be disregarded. Nevertheless, Martin v Hunter's Lessee did eliminate an escape route from Supreme Court domestic domination which might have proved troublesome in Civil War nullification disputes, or in legal cases for which national uniformity is important. On appeal, the Supreme Court finally declared its absolute supremacy over State courts as a general matter, clarifying a number of legal loose threads which had been keeping the precedence issue alive.
McCullough v Maryland 1819) The facts of this case seem considerably simpler than Marshall's long and thundering opinion of them. Indeed, the opinion sounds more like an oration on the meaning of the Constitution, or an enraged obiter dictum , than a terse opinion that the State of Maryland's legislature had passed an unconstitutional law. His remarks are indeed an exposition on the general thrust of the Constitution, foreshadowing many disputes leading up to the Civil War. In effect, it began to make it clear to the slave states that their states-rights viewpoints might conceivably be upheld on a battlefield, but never in a Courtroom. It is thus an opinion which every law student should read several times, and every citizen would profit from reading at least once. At Gettysburg Abraham Lincoln was to restate the principles in concise, even poetic, language. But long before that, Marshall had stood upon a legal mountain, declaiming them in thundering detail.
The Congress shall have power---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.
|Article 1, Section 8, clause 18|
The United States Congress had chartered the Second Bank of the United States in 1816, which then established a Baltimore branch in 1818. There was a national financial panic in 1818, which probably hastened local bank lobbyists to the Maryland Legislature, looking for relief from the unwanted federal competition. Maryland passed a law imposing a fairly high state tax on the operations of the new federal bank. McCullough, the cashier of the federal branch bank, refused to pay the tax. On appeal, McCullough maintained the tax was unconstitutional, and the U.S. Supreme Court upheld him, ordering the opinions of the Maryland courts to be reversed. John Marshall wrote the opinion and took the occasion to set forth his views on constitutionality. Point by point, my point.
What it meant, the old Federalist in a sense intoned, was the states had lost power at the Constitutional Convention and were not going to get it back. The founding fathers and George Washington, in particular, had been uneasy about accusations they had gone beyond their mandate in even calling the Philadelphia Convention. The Articles of Confederation had declared its own provisions to be "perpetual", and the states had previously bound themselves to that. True, the Confederation Congress had authorized a study of how to improve the Articles, but it had never gone so far as to suggest the Philadelphia Convention toss them out.
When the Philadelphia Convention was finishing up its work, Gouverneur Morris had written a preamble beginning with "We the People" in order to assert that its authorization came from the people and not from the governments directly confederated under the Articles, which was true. The ratification process was carefully steered into the language which asked for ratification by the people, acting by states, and from which elected state officers were excluded. The state ratification conventions heard considerable concern about legitimacy voiced by those who probably really disapproved of one feature or another. But overall it was more importantly true that the people at the ratification conventions gradually grew intrigued by the mechanics of self-rule and appreciative of the depth of thought they could see the founders had displayed. By the time the necessary number of states had ratified, public enthusiasm was genuine, while the opposition was squelched into silence or else indirection of speech. Legitimate opposition was acknowledged by specifying that ratification was conditional upon the adoption of a Bill of Rights. Finally, after the new government was subsequently tested by wars and near-wars, pratfalls and triumphs interspersed, the opposition was not only widely judged to have had its say, but its own chance to stumble. After nearly three decades of this, Marshall seems to have decided it was time to lay down the law. All of that is behind us, he said in effect state governments have knuckled under, and the Constitution is indeed triumphant. It was time to snuff out the grumbling and the scheming, and to declare invalid any future attempts at evasion.
The constitutional compromise had confined federal power to a few defined activities and whatever else was proper and necessary within those powers. It did not limit Congress to "absolutely" necessary and "absolutely" proper actions which might heedlessly confine such limited powers to awkward and inefficient behavior. Rather, the Constitution identified areas of power where the two types of government were best suited, expecting them to do their best without hampering each other with turf battles. If Congress decided that banks, or chartered corporations, were desirable means of promoting commerce which had been left unspecified in the Constitution, states could not for that reason alone interfere with federal use of them. States could charter any corporations and banks they pleased, and the federal government could do the same, but only if necessary and proper. There were many other features left unspecified, proper enough for the states to do, but which the federal government might also do -- when necessary and proper to implement its enumerated powers. It was, in short, improper for states to interfere with what was desirable for the national government to do unless the Constitution prohibited it. And the U.S. Supreme Court would be there to decide close cases.
In particular, the states were not to undermine the federal government in the legitimate pursuit of its enumerated powers. Of the strategies available, taxation was particularly vexing, since the difference between a fair tax and a burdensome one can be a matter of opinion. Ultimately, the power to tax is the power to destroy, and it would be better not to have the states taxing the national government in its operations, like issuing currency. The exception might be made for traditional state activities like taxing the bank's real estate. But if the states can tax currency operations, they can set any price, taxing anything if they set about to undermine legitimate Federal activities; such hampering was not contemplated at the Philadelphia Convention, and it will not be tolerated by the courts. Legislatures whose sovereignty ends at their state borders have no right to tax the entire nation which extends beyond those borders. And since state courts must follow state interests and state constitutions, their rulings are subordinate to those of the federal courts, as well.
With the one possible exception of international treaties, all government entities which might challenge the Supreme Court had by now had their noses rubbed in subordination to it. John Marshall went a step further. He even invented a new way to fashion laws which no one at all could challenge: as long as he spoke for the majority, the asides and comments of the Chief Justice in his obiter dicta had become a sort of supreme law.
|Dr. Ronald J. Granieri|
Dr. Ronald J. Granieri of the office of Secretary of Defense recently spoke to the Right Angle Club about recent threats to the unification of Western Europe. One of his more striking points was that the 1989 collapse of the Soviet Union ending the Cold War, may have unintentionally thwarted the plans for a European Union. The Iron Curtain running from the Baltic to the Black Sea had served as an Eastern boundary for European dreams. When the curtain suddenly disappeared, the European Union was flooded with applications for membership from the recently liberated, formerly Communist-dominated, Eastern Bloc. It was understandable why these countries would wish to get away from Russia, and equally understandable that Russia would be annoyed. But bedazzling expansion was quite unexpected by the European Founding Fathers, who were having enough trouble without doubling their number with weak economies. If Napoleon or Bismarck or some other empire-builder had been in charge at that time, Europe would either have been expanded by brute force, or its borders slammed shut with brute force. But in the clutch, no one was thinking big. Acquiring twenty new nations was an undreamed-for opportunity, but a technical headache for academic theorists. It called for bold action at a time when bold actors were not in charge.
Although it hurts European pride to admit they were following the American model, most of the problems they were encountering were the same problems our own Founding Fathers encountered in 1789. There were two main differences, however, one of which had been written into our Constitution. The other went largely unnoticed. The written difference was we had a bicameral legislative branch, designed to address the issue of voting rights straddling three big states and nine little ones. Pennsylvania had already gone through a dispute over the unicameral Pennsylvania Legislature, which proved to have so much power it unbalanced the three-branch system of government. Consequently, the Philadelphia Constitutional Convention, held in that same building, was already uneasy about unicameral legislatures. It was John Dickinson the delegate from little Delaware, who went to James Madison (of Virginia, then the largest state) and told him bluntly that if Virginia persisted in demanding a unicameral Congress with representatives elected by population size, well, there just wasn't going to be any Union. The three big states refused to participate in any one-state, one-vote, system, while the nine small states wouldn't submit to large-state domination by population size. Either voting by state or voting by population would inevitably result in one side winning every hotly contested vote in a unicameral legislature. So, we had solved our problem by having two legislative houses, one of each kind, and agreeing that legislation would only proceed if both houses were in agreement. What made any legislation possible under these terms, was the informal system of "logrolling", in which informal agreements on seemingly unrelated matters would compensate the loser branch of government, and the states they represented. Since in modern Europe, any group of ten or twenty states in a union would surely have memberships of unequal size, bicameral legislatures seem to Americans to be a perfectly sensible arrangement, so get on with it. The insistence by the League of Nations and the United Nations for one-vote, one-nation arrangements, is a major reason the United States never permitted these supranational forums to have much power.
It's an unspoken truth however, that other nations do not see it our way. That's partly because the German and other parliaments going all the way back to the Roman Senate had established a unicameral tradition in Europe. The other main but unwritten cause of Constitutional differences between the two continents is that we had been surrounded by thousands of miles of ocean, and never had to consider the danger that external and internal enemies would join forces to frustrate our decisions. It is true that many attempts were made to do just this, but they were immediately recognized and easily quashed in the past. As long as the Iron Curtain was operational, Europe thought it might have such ocean-like protection as well, but events in 1989 swept that idea away. With a large addition of formerly hostile states, some members were occasionally bound to join forces with Russia or China, even though they were nominally loyal citizens of the EU. Traitorous behavior had long been an underlying cause of splinter parties and brutal suppression, but that was when Communists were thought by everyone to be agents of a hostile foreign power. With the end of the Cold War, they might become misguided local citizens exercising freedom of speech, claiming a right to argue for behavior which would have formerly been denounced as traitorous. Nations harboring few such inclinations soon became cautious about joining a government with nations who had a great many of them. Citizens of recently enslaved nations were particularly resistant to soothing arguments about unity. It must be confessed that the example of our own Civil War lends force to this feeling of what might happen.
|Baltic and Black Seas|
It may be claiming too much to describe the fall of the Iron Curtain, as the major reason for the decline of interest in forming a political union in Europe. That decline did occur and was replaced by the rather weak stratagem of leaving unified government to another time. In its place appeared a strategy of economic unification, hoping the benefits to everyone would become so apparent that unified nationhood would follow. A substrate emerged, narrowing it to a unified currency, the Euro. Bankers and other financial experts argued that such unification would be fairly simple and effective. And so it proved until the same difficulty appeared in a different form. The design of the Euro Currency Zone had apparently underestimated the problems of a foreign currency operating together with the Euro, and variants of Gresham's Law surfaced. Small nation members like Iceland and Cyprus found their small banking systems could not cope with huge inflows of flight money, escaping to tax havens within the Eurozone. As well, underdeveloped member nations actually romanced non-member capital to relocate to their shores. Since local currency is ultimately supported by the full faith and credit of the nation, local banks and economies cannot easily deny equal protections to foreign capital, except temporarily while exchange controls are applied. But when a sufficiently small nation is thus forced to guarantee a sufficiently large amount of foreign money, local banks and markets will be destined to crash. If, in addition, the member nations are deprived of the ability to devalue their currency as the Eurozone could, some type of informal arrangement for a two-value currency had to be devised unless more prosperous members like Germany were willing to subsidize the money flows. When two currencies of unequal value circulate together, said John Gresham to Queen Elizabeth I, the more valuable one will quickly disappear.
|Governor Chris Christie|
The November 2013 elections have been widely accepted to be a spectacular win for New Jersey Governor Chris Christie, suddenly making him a presidential front-runner for 2016. The only other significant election was a close win in the Virginia gubernatorial race for a fund-raising crony of Bill Clinton over the Attorney General who started the Supreme Court Case over Obamacare. In the view of the news media, there were only two elections in this off-year -- a landslide in New Jersey, and a dead heat in Virginia, for Governor.
Well, as a matter of fact, there was also an election in New Jersey for all of the members of the legislature, which means that I was running against the Democratic majority leader in the 6th Legislative District. I got 19,000 votes, but I needed more to win. At least in my family, it was a big event, particularly since no one else in New Jersey contributed a dime to my campaign, and while Governor Christie may have whispered a few encouraging words to me, there was no evidence of his assistance. But you can forget about that, too, because this election was really about the minimum wage.
The first inkling I got that something was up was receiving a sample ballot, three days before the election, where there was a referendum question about the minimum wage that no one had told me about, although it could scarcely have been a secret to get it on the ballot. And secondly, on election day there was scarcely any evidence of campaigning for Democrat candidates except for a few yard signs, but literally, dozens of campaign workers poured into the subway stations, handing out great volumes of campaign literature about the minimum wage. Even that went past me unnoticed, because who in the world would vote for a proposal which would increase unemployment during a severe recession? When I expressed the same sentiment to my Democratic friends, I was surprised to discover they all knew about it in advance. In retrospect, that was a fairly good indication that the Internet had selectively urged support of this proposition to the party faithful, but had not said one word in campaigning for it. It won endorsement by a heavy margin, as things soon turned out. What's worse, what had been endorsed by referendum had been to amend the constitution to this effect, automatically indexing it to the cost of living. It's going to be pretty hard to reverse that since all constitutions have been written to make it very hard to amend them.p> In the week after the election, I notice that several other states have been considering raising the minimum wage. An article appeared on the editorial page of the New York Times arguing that research showed there was no evidence that raising the minimum wage caused unemployment, and a few days later, Paul Krugman had a learned column on the Times editorial page to the effect that smart people all knew there was no reason to expect unemployment from raising the minimum wage, and only the hopelessly ignorant rubes would imagine there was reason to think so. Having spent some time with editorial writers, it seemed pretty evident to me that there was a nationally coordinated effort to convert this into a truism, accepted so widely it would be futile to argue against it. When it is also possible to see the existence of a campaign to impose a maximum wage (and not merely in Switzerland, where it was defeated on a ballot), the trajectory of a rising minimum wage meeting a falling maximum wage easily led to conjectures that what was really afoot was a campaign to take wages out of the marketplace. Or was that really the goal?
For months, the Federal Reserve Chairman has been emphasizing that the Fed must obey two mandates: to maintain price stability and to minimize unemployment. Meanwhile, the dirty little secret among economists has been that unemployment is the main obstacle to inflation in the face of a massive enlargement of the money supply. Unemployment is currently at 7.1% and falling, while the Fed has lifted the veil of "transparency" to reveal it made a promise in double-speak to start selling some of the bonds it issued to combat the recession when unemployment reaches 6.5%. As time has gone on, Mr. Bernanke has seemed to back away from that promise. He is not so sure that unemployment is a good measure of unemployment, other measures may be a better measure of what we are driving at. He never meant to start selling bonds when unemployment reached 6.5%, he only meant that he might reduce the number he planned to buy. He never meant to make a promise, he only was being transparent about the current thinking of the Board. And anyway, Janet Yellen will take over his job in a month, so you can't very well bind your successor to do anything at all. What's this tap-dancing all about?
Well, it simply won't do, to suggest that the Federal Reserve isn't as independent of politics as it pretends to be. But everyone noticed that the stock market had a bad fainting spell when he suggested a few months ago that the Board had been discussing the matter; just imagine what it would do if he actually made a promise to act, let alone actually taking an action. By itself, such an announcement would probably send interest rates on a rise toward normal levels. The stock market mostly anticipates the future, so it would jump ahead of whatever action was taken. Since the United States is now the largest debtor on earth, a rise of interest rates would immediately add huge amounts to the current deficit and the projected national debt. The stock market would almost surely drop, possibly severely, in response to such commotion in the debt markets. And the national economy would certainly feel the deflationary effect of such activity in the financial markets, sending markets even lower. Fear of such a reaction would surely persist longer than the real need for monetary easing, making the resultant inflation even worse than it had to be.
Is it possible the Obama Administration prefers a little extra unemployment, to risking a stock market crash before a coming election?
|Minimum Wage Uproar|
In an era of desperate experimentation with the simultaneous solutions of several problems at once, perhaps the best conservative response to this paper is to seek ways to relax its inflexibility. The political process, particularly the amendment of state constitutions, is a lengthy and cumbersome impediment to agile management of the economy. It is fairly unlikely that a secret springing of a referendum trap can be repeated. The greater risk is that we will know what should be done, but become unable to do it quickly.
Meanwhile, the politicians are designing things and politicians like things simple. The Republican solution is to pass a minimum wage, but keep its benefit slightly below the entry-level wage; they get credit for passing it, but it has almost no applicability. The Democrat approach is to make a big noise about passing a meaningless bill, promising they will make it up with off the balance sheet entitlements, like health care and college tuition. Either way, usually nothing much happens after the election is over.
|Posted by: Charles La Rue | Oct 20, 2009 8:15 PM|
Delaware's Court of Chancery
Georgetown, Delaware is a pretty small town, but it's where the major corporations of the nation plead their case.
Articles of Confederation: Fatal Flaw
Some subtle features make the Constitution a vast improvement over the Articles of Confederation.
IF MEN WERE ANGELS, NO CONSTITUTION WOULD BE NECESSARY
A lot of shrewd thinking went into the checks and balances of the Constitution.
Owen Roberts: A Switch in Time
His old law firm devotes a reception room in his name, but not everyone is pleased with his writing the documents establishing the Barnes Foundation, or his capitulation to Franklin Roosevelt's threat to pack the US Supreme Court.
The Third Pennamite War (1778-1784)
Connecticut and Pennsylvania stopped fighting during the Revolution, but then promptly resumed hostilities. The Decision of Trenton gave the prize to Pennsylvania, whose legislature promptly abused the helpless remaining Connecticut settlers.
The consequences of this little-noticed amendment should be re-examined.
Unwritten Lessons For the European Union
The Europeans, trying to unite 27 countries into one, should study America's problems uniting 13 colonies in 1787. It isn't easy, and it gets harder with increasing the numbers of participating states.
U.S. and E.U. Exchange Experiences (1)
The European Union follows the American example. ...
Compromise Outside the Borders of a Debate
.....Break a deadlock by seemingly unrelated trade-offs.
Bank Accounting Off the Books
Recent waves of mergers, one-bank holding companies, and subsidiaries have tangled the assessment of losses in the credit crisis, slowed the acknowledgment of losses, had an inflationary effect, and the appearance of illegality in an environment of blame seeking.
Hedge Funds in Delaware
The state of Delaware attracts clusters of businesses for reasons having to do with its legal system; call it Delaware Attractiveness. At the moment, it attracts hedge funds.
Vote Counting, Past and Future
Voting law changes followed the contested 2000 Presidential election, but U.S. Supreme Court still comes out looking pretty good. Close elections will always cause problems, some of them brand new ones.
George Washington Demands a Better Constitution
George Washington was an athlete, a soldier, and an adventurous leader. It is less appreciated that he constructed that aloof public image of himself, cloaking an activist politician, and a rather ambitious real estate developer. We got a new Constitution because he wanted a new constitution.
Designing the Convention
To understand the original intent of the Constitution, it helps to see it in three parts. The part Washington and Madison devised in 1787 was mostly about structure, the main goal of which was to lay out certain national functions which the federal government could perform without state interference. That's delicate diplomacy because the states had to ratify it.
A Gleam in Washington's Eye
Section 8 of Article I of the Constitution contains the enumerated powers of Congress, and Section 9 contains some prohibitions of Congressional power. Taken together, these "powers" constitute the arguments that a Union is superior to a Confederation. In the aggregate, they represent the reasons why we created a Union.
Since the Bill of Rights doesn't really count as corrections, the Eleventh Amendment is sort of the first attempt to change the Constitution. In retrospect, the purpose seems unclear.
Revising, Amending, and Skirting The Constitution
If you don't like what The Constitution says, what can you do about it?
Tenth Amendment: Nothing Up Our Sleeve
Short and sweet, the Tenth Amendment makes it explicit that the several American states gave nothing to the Federal government unless the Constitution spelled it out.
As Others See Us
Perhaps the Europeans are intentionally slow to adopt our form of Constitution.
George Washington on the Federal Union
On September 17, 1796, George Washington declined another term for President, taking this occasion to urge the cause of Federalism.
States Rights Confront Civil War
The Constitution took certain defined powers from the states and gave them to the Federal Government. A further steady erosion of states rights began, but the Republican Party gave things a big push during the Civil War.
First Amendment: Separation of Church and State
Eleven of the original thirteen colonies had,"established" religions. The separation of church and state by the First Amendment was not a statement of fact, but a worrisome departure from the past, mostly prompted by the behavior of the Virginia Episcopalians. For the Pennsylvania Quakers, disestablishment was a most disheartening event.
How Does New Jersey State Aid Affect School Districts?
State aid for schools is like health insurance: costs go up faster when you aren't spending your own money. At least, that's what the New Jersey statistics seem to show.
School Tax Seldom Equates to School Spending
Voting today on school budgets, local districts in New Jersey do not seem to realize how poorly school spending correlates with school tax rates.
Special Education, Special Problems
Until recently, mentally retarded children weren't even considered in school budgets. But in recent decades, they have become one of the biggest challenges.
Selling Entire Towns
Some builders build whole towns without houses and then sell them to custom home builders.
RR Monopoly Self-Destructs
Railroads are inherently monopolies. That breeds regulation, and from there on, it's downhill.
Political Parties, Absent and Unmentionable
Our Constitution is much praised for exquisitely balancing power between the three branches of government. It would even be an achievement to require two centuries to find a way to unbalance them.
Addressing the Flaws of Republics
We need some local, not national, think tanks. To understand why, it helps to have been elected to something, yourself.
Washington's Circular Letters
During the dismal days of 1782-3, Washington was confronted with the first of many examples of the American tendency to quit a war before it is completely won.
Regulation Precision: Not Entirely a Good Idea
Unconstitutionality of Otherwise Desirable Laws
Powel House, Huzzah!
Lowering the Taxes on Corporations
Anatomy of an Urban Political Machine
Morris at the Constitutional Convention
How Could We Improve State Legislatures?
Two Friends Create the Articles of Confederation
Roberts the Second
Implicit Powers of the Federal Government
Sources of Revolutionary Populism
John Marshall Decides Three Cases
Stress Tests for the European Union
Minimum Wage Fangdoodle
President James Madison's veto message on Internal Improvements Bill (March 3, 1817) makes a powerful statement about states rights and the limitation of federal powers.
On 3rd Street in Philadelphia's Society Hill, stands the finest surviving Georgian House of what Washington and Madison called the Republican Court. A great many traditions of American high society were formed in the second-floor dining room of this house.
When Ireland lowered corporate taxes, inviting corporate immigration, and then precipitating an international financial crisis, it drew attention from others. Instead of warning them, it encouraged them to imitate Ireland.
If Philadelphia is typical, here is how urban machine politics works.
Robert Morris knew that credit is only extended to someone with a reputation for paying his bills.
Moving your place of residence has many influences, but property taxes seem to have the biggest influence on business executives decided to move. By contrast, property prices have the biggest influence on the middle class.
If state legislatures are as bad as their reputation, we ought to be asking questions. Like, how did they get that reputation, and what can improve it?
John Dickinson and Robert Morris were good friends who pushed the Articles of Confederation through to ratification. Both of them had been active critics of Great Britain's treatment of the colonies, but both hesitated to sign the Declaration, and both later relented and fought for Independence. Dickinson's final position is less clear, but it was Morris who first saw the weakness of the Articles, and pressed on for their replacement by the Constitution.
Chief Justice John Roberts seems to be intent on radical changes to the Supreme Court, made in a conservative way.
The Constitution strictly limited the number of federal powers, but did not define their boundaries. Intending to be flexible, it opened a permanent loophole.
A major source of growing populism among the aristocratic founding fathers was the aging of rebel boys into Revolutionary Veterans.
Marbury v Madison (1803), Martin v Hunter's Lessee (1816), and McCullough v Maryland (1819) -- these three cases were the ones where John Marshall changed judicial history. Taught in law school as case law, they are more accurately moments of national history.
Ending the Cold War in 1989 may have generated an unexpected obstacle to European unification.
While no one was looking, mandating a minimum wage turned into a contrivance to maintain low-interest rates.
Unconstitutionality of Otherwise Desirable Laws
Powel House, Huzzah!
Lowering the Taxes on Corporations
Anatomy of an Urban Political Machine
Morris at the Constitutional Convention
How Could We Improve State Legislatures?
Two Friends Create the Articles of Confederation
Roberts the Second
Implicit Powers of the Federal Government
Sources of Revolutionary Populism
John Marshall Decides Three Cases
Stress Tests for the European Union
Minimum Wage Fangdoodle