John Locke, Charles de Montesquieu, Republican Government, Separation of Powers, Enumerated Powers, Federalists and anti-Federalists

Posted by PITHOCRATES - July 26th, 2012

Politics 101

Funny thing about the Americans is that they just didn’t Like Paying Taxes

United we stood.  For awhile.  Until we defeated the British at Yorktown.  And negotiated the Treaty of Paris where Great Britain recognized our independence from the British Crown.  But people grew weary of the war.  On both sides of the Atlantic.  And those in the once united states (small ‘u’ and small ‘s’) were eager to retreat to their states.  And forget about the Continental Congress.  The Continental Army.  And everything to do with the confederation.  Threatening to undo everything they fought for.  Because of their sectional interests.

Shays Rebellion nearly pushed the country into anarchy.  It was the tipping point.  They had to do something.  Because if they weren’t united they would surely fall.  They owed Europe a fortune that they had no hope of repaying.  Funny thing about the Americans.  They just didn’t like paying taxes.  Making it difficult to repay their debts.  The Europeans gave them little respect.  France tried to sell them out during the peace talks to rebalance the balance of power in their favor.  Spain wanted to keep them east of the Mississippi River.  And off of the Mississippi.  Even refused them passage through the Port of New Orleans.  Britain didn’t evacuate their western forts.  The Barbary pirates were capturing American shipping in the Mediterranean and selling their crews into slavery.  And Catherine the Great of Russia wouldn’t even meet the American ambassador.  So the Americans were the Rodney Dangerfield of nations.  They got no respect.

In 1787 delegates gathered in Philadelphia.  To revise the Articles of Confederation to address these problems.  Some enthusiastically.  Some begrudgingly.  While one state refused to attend.  Rhode Island.  For they were quite happy with the way things were.  As the smallest sate in the union they had the power to kill almost any legislation that didn’t benefit Rhode Island.  For some legislation the vote had to be unanimous.  And they enjoyed charging other states tariffs for their goods unloaded in Rhode Island ports.  Things were so nice in Rhode Island that they didn’t need much taxation.  Because they had other states funding their needs.  Thanks to those tariffs.  Of course, this did little to benefit the union.  While imposing taxes on their neighbors in the union.  Sort of like taxation without representation.  Funny thing about Americans, though.  They didn’t like paying taxes.

Montesquieu said a Republican Government must Separate Power into Three Branches

Thomas Jefferson was in Europe in 1787.  John Adams, too.  But just about every other “demi-god” (as Jefferson called those at that gathering) was in Philadelphia in 1787.  America’s patriarch Benjamin Franklin.  The indispensable George Washington.  The financially savvy Alexander Hamilton.  The studious James Madison.  The Framers of the Constitution.  Highly principled men.  Well read men.  Prosperous men.  Who were familiar with world history.  And read the great enlightenment philosophers.  Like John Locke.  Who especially influenced the writing of the Declaration of Independence.  With his inalienable rights.  Consent of the governed.  And property rights.

As they gathered in Philadelphia to revise the Articles it became clear that they needed something more.  A new constitution.  A stronger federal government.  With the power to tax so they could raise money.  For without money the union could not solve any of its problems.  So they set upon writing a new constitution for a new government.  A republican government of republican states.  As they began to frame this constitution they drew on the work of a French philosopher.  Charles de Montesquieu.  Who championed republican government.  The ideal government.  A government of the people who ruled at the consent of the governed.  With built-in safeguards to protect the people’s inalienable rights.  The key requirement being the separation of powers.

Montesquieu said a republican government must separate power into three branches.  The legislature, the executive and the judiciary.  A nation of laws requires a legislature to write the laws.  Because the laws must respect the inalienable rights of the people the people must elect the legislature from the general population.  So the legislature’s interests are the people’s interest.  However, if the legislature was also the executive they could easily write laws that represented their interests instead of the people.  Elevating the legislature into a dictatorship.  If the legislature was also the judiciary they could interpret law to favor their interests instead of the people.  Elevating the legislature into a dictatorship.  Likewise if the executive could write and interpret law the executive could elevate into a dictatorship.  Ditto for the judiciary if they could write the law they were interpreting.  So the separation of powers is the greatest protection the people have against a government’s oppression.

If a Power wasn’t Delegated to the New Federal Government it Remained with the States

During the Constitutional Convention they debated long and they debated hard.  The Federalists were in favor of a stronger central government.  The anti-Federalists were not.  The Federalists included those who served in the Army and the Congress.  The anti-Federalists were those who didn’t serve ‘nationally’ and favored states’ rights.  In general.  So one side wanted to increase the power of the central government while the other side wanted no central government.  For their fear was that a new federal government would consolidate power and subordinate the states to its rule.  As if the last war never happened.  And the states would still bow to a distant central power.  Only this time to one on this side of the Atlantic.

So the balance they struck was a two-house (i.e., bicameral) legislature.  A House of Representatives.  And a Senate.  The people in each state elected a number of representatives proportional to their state’s population.  So a large state had a large representation in the House.  So that house represented the will of the people.  To prevent the tyranny of the minority.  So a small privileged class couldn’t rule as they pleased.  Whereas the Senate prevented the tyranny of the majority.  By giving each state two senators.  So small states had the same say as big states.  Together they represented both the majority and the minority.  Further, states’ legislatures chose their senators (changed later by Constitutional amendment).  Providing the states a check on federal legislation.

To round things out there was an executive they called the president.  And a judiciary.  Providing the separation of powers per Montesquieu.  They further limited the central government’s powers by enumerating their powers.  The new federal government could only do what the Constitution said it could do.  Treat with foreign powers.  Coin a national currency.  Declare war.  Etc.  If a power wasn’t delegated to the new federal government it remained with the states.  To give the new federal government some power.  Including the power to tax.  While leaving most powers with the states.  Striking a compromise between the Federalists and the anti-Federalists.


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FT124: “Liberals use the courts to give them what the people won’t.” -Old Pithy

Posted by PITHOCRATES - June 29th, 2012

Fundamental Truth

Magna Carta led to Constitutional Monarchy and Representative Government

Medieval kings liked doing as they pleased.  From living well.  To expanding their kingdoms by force.  Or trying to.  As kingdoms got larger, though, this was more difficult to do.  Because the larger the kingdom got the more food they had to produce.  And kings didn’t feed their kingdoms from their castle vegetable gardens.  They needed the wealthy and powerful landowners.  Who owned the land.  Grew the food.  And provided the kingdom’s wealth.

These landowners made land valuable.  By growing food on it.  As famine was no stranger during the Middle Ages there was nothing more important than growing food.  Those who did became wealthy.  And their estates became mini kingdoms.  With lots of peasants working the fields.  And lots of soldiers to defend their land.  And to fight for their king in times of war.  Kings needed to maintain good relationships with these wealthy landowners.  To keep them supporting their kingdoms.  And to prevent any one of them from rising up and challenging the king for his throne.

King John of England was hurting his relationships with the wealthy landowners.  He fought a lot of expensive wars across the English Channel in France.  Which required high taxes on the English landowners.  The barons.  Worse, King John lost a lot of his battles in France.  Losing the barons some of their Normandy lands.  So the barons were becoming a little disgruntled with their king.  And they rebelled.  Eventually forcing the king to place his Great Seal on Magna Carta.  Limiting his powers.  It didn’t change things much at the time.  But it would lead to constitutional monarchy.  And representative government.

The Patriots of 1776 were none too keen on Creating a New Central Power

Kings don’t like limits on their power.  King John would go on to renounce Magna Carta.  And got the Pope’s approval to not honor the promises he made with the barons.  But these barons sowed the seeds of representative government in England.  And the Western World.  Greatly influencing the Founding Fathers in America.  Whose Constitution placed great limits on the government’s power.

The Americans were having some problems with their Articles of Confederation.  The sovereign states were taking care of themselves.  Sometimes at the expense of the other states.  Or the new nation.  And the new nation wasn’t making much progress in the international community.  A bit of a laughing stock to other nations.  Who were all sure it was only a matter of time before the American colonies would be British again.  For once the war was over there was little united about the states anymore.  So James Madison urged a meeting of the several states to revise the Articles of Confederation.  To help make a more perfect union.  And to move the new nation forward.  They met in Philadelphia in 1787.  And caused a firestorm.  For they didn’t revise the Articles.  They threw them away.  And wrote a brand new Constitution.

This inflamed a lot of the Patriots of 1776.  Who had voted to sever the bonds from a distant central power about a decade earlier.  And they were none too keen on creating a new central power to replace the one they just banished.  It took awhile but with the presence of George Washington and some words from Benjamin Franklin, two of the most trusted and experienced Americans who sacrificed a lot in securing their independence, they completed their task.  It wasn’t a perfect document.  But it was the best they were ever going to produce considering the sectional differences in the country.  And they sent it to the states for ratification.  James Madison, Alexander Hamilton and John Jay helped to secure ratification by writing a series of articles that we know today as the Federalist Papers.  Some of the finest Constitutional scholarship ever written.

As Few as Five People in Black Robes can Fundamentally Change the Nation

Key to the Constitution was the separation of powers that restricted the power of the new federal government that no one trusted.  There was a legislature to write law.  An executive branch to enforce law.  And a judicial branch to interpret law.  To make sure that the other two branches did not violate the Constitution.  Such a system would have really crimped King John’s style.  For the law was above all the people.  Including the executive.  He could only do the things the laws allowed him to do.  And the things the laws allowed him to do he could only do if the legislature agreed to pay for them.  It was a system of checks and balances that helped the nation to grow while maintaining personal liberty.

King John would have been particularly irked by the legislature.  Made up by representatives of the people.  Who enacted legislation that was in the best interest of the people.  Not him.  Fast forward to modern times and you find history littered with people who wanted to expand their power only to have that representative body of the people foil them.  Ruling elites.  Modern aristocrats.  Those who feel an entitlement due to a superior education.  A superior bloodline.  Or simply like-minded people who would rather have the days of unlimited power like they had in Medieval Europe.  Before the barons had to muck up the works with Magna Carta.

Over time they learned how to bring back some of the old ways.  The easiest way was just to get people to vote for them.  And they did this by giving them a lot of free stuff.  But there were some things that they just couldn’t bribe out of the people.  So they turned to the courts.  And did a little legislating with activist judges.  Sometimes bringing a suit all the way to the Supreme Court to create a law where there was no law.  Abortion is now legal even though there was never any federal legislation addressing it.  While there was plenty of state legislation forbidding it.  Until seven men in black robes overruled the will of the people in those states.

The Supreme Court is powerful.  For as few as five people in black robes can fundamentally change the nation.  Which is why presidential elections are so important.  Because presidents nominate judges to the Supreme Court.  And those on the Left depend on the timely deaths and/or retirements of Supreme Court judges so they can nominate activist judges.  To get a majority on the high court to rule in their favor on bad law.  Such as Obamacare.  An unpopular law.  A law the majority of the people want repealed.  A law that became law only with subterfuge (the mandate is not a tax).  A law that clearly violated the Constitution (forcing people to buy something).  Yet five people in black robes just fundamentally changed the nation by voting that Obamacare was Constitutional (the mandate is a tax).  Which just goes to show you that where there is a will there is a way.  A way to rule like a king.  Against the will of the people.


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Continental Army, Continental Congress, Inflation, Wage & Price Controls, Paper Money, Specie, IOUs, Impressment and Repudiation

Posted by PITHOCRATES - May 3rd, 2012

Politics 101

The Articles of Confederation made the United States of America a Confederacy of Sovereign States that had Little Power to Raise Revenue

By the time the Continental Army left Valley Forge they could hold their own against the British Army.  The British couldn’t push them around any longer.  They became so good that they fought the war to a standstill.  They came close to some major wins on the field of battle.  But close didn’t diminish the staying power of the British Army.  And they stayed.  On the battlefield.  And in their cities.  Dragging the conflict out for a total of 8 years.  And no matter what era of warfare you use to measure war-years 8 years of war is very costly.  Someone has to pay for it.  And, ultimately, it’s the people.  Either through taxation.  Or the loss of wealth through inflation.  Or simply the loss of wealth through the losing of your stuff.  And going without.  Because the army fighting for your liberty had no choice but to take what was yours.

This made the Revolutionary War unlike other wars.  For this war was about liberty.  Property rights.  The tyranny of a distant power.  And unjust taxation.  In other words this war was against all the things that made fighting a war possible.  You can’t really draft men to fight in a country that stands for liberty.  You just can’t confiscate the things you need to wage war from your people in a country built upon the principle of property rights.  You can’t declare martial law and suspend the rule of law on people you deem not to be patriotic enough in supporting the cause when you’re fighting the tyranny of a distant power that does.  (Even the Americans gave British soldiers a fair trial for the Boston Massacre).  And taxes?  The people that dumped tea into Boston Harbor over the principle of no taxation for revenue purposes without representation in Parliament was not going to be able to tax their people on a federal level.  Which proved a big obstacle in paying for the war to win their liberty.

The Articles of Confederation made the United States of America a confederacy of sovereign states.  And those sovereign states held the real power.  Virginia.  Massachusetts.  Pennsylvania.  New York.  And the other 9 sovereign states.  Not the United States of America.  That confederation that was waging war against the mightiest power in the world.  Which made raising funds difficult.  For without the power to levy taxes all they could do was ask.  Just like George Washington did all of the time.  Especially during that horrible winter at Valley Forge when his army was naked and starving.  He asked the Continental Congress for provisions.  And the Continental Congress asked the several states for their apportioned funds raised by their state legislatures.  Per the Articles of Confederation.  If they didn’t pay these funds timely or in full (or at all) they could ask again.  And that’s all they could do.  Which is why George Washington’s army suffered through that horrible winter.  Because the funds weren’t there to buy Washington the provisions his army needed.

Thanks to Inflation the Continental Army often had No Choice but to Take what they Needed from the People they were Fighting For 

The Americans never had enough money.  Which makes it amazing that they held off losing for 8 years.  Eight very costly years.  And won.  Especially considering how bad the economy was during the war.  Unable to tax or get sufficient loans from Europe they had little choice but to print money.  Which caused a whole lot of trouble.  For the more money they printed and put into circulation the more the value of their currency fell.  And soon a Continental was “not worth a Continental.”  And when the currency lost its value it took more of it to buy things.  Which led to price inflation.  The price of material and parts grew so high that it increased the cost of American manufactured muskets over the cost of imported French muskets.  Which they had to bring in through a British blockade.  Giving what should have been a cost advantage to the Americans.  Had it not been for the inflation.

To try and keep prices under control they implemented wage and price controls.  Which didn’t work.  The continued devaluation of the currency forced sellers to raise their prices to cover their rising costs.  Forcing them to sell below their costs would just put them out of business.  Voluntarily.  Or involuntarily.  Creating shortages in the market place.  Some offered lower prices for specie (gold and silver coins).  You can’t print hard money (specie).  So it held its value.  Unlike the paper money.  So a little of specie went a long way compared to paper money.  Of course, this didn’t help their wage and price controls.  It just made the paper more worthless.  And raised prices further.

There was yet another ugly side to this sordid business.  High prices and shortages created opportunity to profit handsomely.  There was speculation and market manipulation (hoarding, cornering the market, etc.) to take advantage of those highly priced items that were in scare supply.  Further raising prices for the people.  And compounding the problems of provisioning the army.  Which infuriated the low-paid soldiers.  Who the Continental Congress paid in that worthless paper money.  Angry mobs arose to address this profiteering.  As well as new laws and enforcement.  But they helped little.  The army often had no choice but to take what they needed from the people they were fighting for.  Either outright.  Or in exchange for IOUs.   Promises that the Continental Congress of the United States of America would make good on.  Just as soon as the several states paid their apportioned funds raised by their state legislatures. 

If you Violate the Ideals you’re Fighting for while Fighting for those Ideals it can Complicate the Peace

Fighting for an ideal makes war complicated.  If you’re just a tyrannical dictator looking to rape and pillage it makes things easier.  You don’t have to worry about liberty.  Property rights.  Debt.  Or taxes.  In the short term.  Or the long term.  Which made the American Revolutionary War a very difficult war to fight.  Because at the heart of the United States of America were those ideals.  To win this war to grant liberty to the people required taking their liberty away.  A little.  To win this war to guarantee property rights you had to violate property rights.  A little.  To win this war against tyranny you had to use excessive force against your people.  A little.  To win this war to establish taxation only with representation caused the destruction or personal wealth.  A lot.  Through impressment (taking things from the people).  Borrowing from foreign countries.  Or through inflation.

When the French joined the Americans in 1778 inflation was already out of control.  They printed twice as many Continentals in 1778 as they did in the last three years combined.  And there was serious discussion about doing the unthinkable.  Repudiation.  To simply escape the inflation by escaping the currency.  To retire the bills from circulation.  At a fraction of their value.  And that’s what they did in 1780.  Issuing new currency based on specie for the old currency at a 40 to one ratio.  The states were to tax their people to raise the funds for the new currency.  So the people took a huge short-term loss.  For a stable long-term future.  Based on specie.  That they couldn’t inflate.  This hard money would come from in large part the Spanish and the French.  The Spanish in Cuba buying American flour with specie.  And French aid.  As well as their army and navy spending their hard money in the American economy.

Wars are costly.  And they are rarely nice.  Trying to make them nice can make them last longer.  Which will make them more costly.  Of course, if you violate the ideals you’re fighting for while fighting for those ideals it can complicate the peace.  Luckily, for the Americans, they won their peace.  Their allies, the French, were not so lucky in their revolution.  The French Revolution.  Fought less than a decade after the American Revolution came to a close.  And unlike the Americans the French peace that followed was a bloody one.  That would eventually replace the king they executed with an emperor.  Napoleon Bonaparte.  Who the Americans helped bring to power in part due to the crushing debt King Louis XVI incurred supporting the Americans in their revolution.


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War Debt, Seven Years War, Revolutionary War, Articles of Confederation, U.S. Constitution, Central Government, Federal Spending and Fiscal Policy

Posted by PITHOCRATES - February 7th, 2012

History 101

Americans don’t like Paying Taxes

Americans don’t like paying taxes.  A dispute over taxation without representation led to American independence from British rule.  For Britain had been fighting for many years in many wars.  And ran up an enormous war debt.  Which they had to repay.  Because some of that debt was incurred protecting the American colonists from the French and Indians during the Seven Years War, some had a bright idea.  “Here’s a thought,” they said, “Let’s have the Americans pay their fair share.  I mean, fair is fair, right?  Besides, it’ll be a lot easier getting money from the Americans than it will be getting it from Parliament, eh wot?” 

The Seven Years War, though, was a world war.  Fought in many countries and on many seas.  Costing lots of money.  Which Parliament was financing with lots of taxes.  But the British taxpayer had tax fatigue.  And felt they had no more taxes to give.  Or wanted to give.  As they had a say in Parliament raising taxes further was a nonstarter.  But the Americans had no representation in Parliament.  So what could they do?  Turns out they could do a lot.  Now the Americans weren’t unreasonable.  They just didn’t appreciate the, “Oh, by the way, here’s your share of the war debt.  We’ll tax you accordingly.”  Which the British did.  Without so much a by-your-leave.  Rubbed the Americans the wrong way.  If the British had shown them the numbers and gave them a chance to agree on what their ‘fair share’ was they probably would have paid.  And stayed loyal to the Crown.  But the British didn’t.  So the Americans didn’t.

Now fighting wars is expensive.  Especially long ones.  And the Revolutionary War was a long one.  Eight years until they penned their names to the Treaty of Paris (1783) officially ending it.  In these eight years the Americans ran up a great war debt.  And needed to repay it.  Just like the British.  The very thing that started the Revolutionary War.  Now it was the Americans’ turn to raise taxes.  They tried taxing whiskey.  Which led to another tax rebellion.  The Whiskey Rebellion.  For Americans still didn’t like paying taxes.  This time, though, it was a tad different.  Because those they were taxing had representation.  And the new ‘nation’ (a confederation of ‘equal’ states) had the legal authority to impose this tax.  And to put down the rebellion.  Which General Washington did.  To the howls of liberty-loving patriots everywhere.  The tax quietly went away.  But it didn’t solve the nation’s problems.  They were broke.  Needed money.  And they had to get a handle on the massive sums they owed for the world of nations to take them seriously.

Hamilton thought both Jefferson and Burr were Scoundrels but at least Jefferson was a Principled Scoundrel

The new ‘nation’ (that confederation of ‘equal’ states) was the problem.  Just as the world of nations didn’t take the Americans seriously these ‘equal’ states didn’t take the new national government seriously.  There was no taxing authority.  So the federal government could only ask for contributions from the states.  Which often came in late.  And when they did they were often less than they requested.  Some states even refused to pay anything.  Worse, the states were making their own treaties with other nations as well as the Indian Tribes.  Or reneging on the treaties the federal government made with other nations and the Indian Tribes.  The confederation wasn’t working.  They needed something new.  And once George Washington was onboard they called a meeting in Philadelphia (1787) to rework the Articles of Confederation.

Of course they didn’t rework the Articles of Confederation.  They replaced them with a new U.S. Constitution.  And a new nation.  The Preamble to the U.S. Constitution began with “We the people.”  The sovereignty of the new nation wasn’t with the states.  It wasn’t with the new federal government.  It was with the people.  It was a nation of the people, by the people and for the people.  To borrow some words from Abraham Lincoln.  Which meant that although the thing they created had more power than the confederation of states it replaced, its power was limited.  Very limited.  The Framers designed it to do only those things the states could not do well individually.  National defense.  Coin uniform money.  Establish post offices and post roads.  Make national treaties with other nations and Indian Tribes.  Declare war.  Create a standard of weights and measures.  But little more.  In fact, the Constitution listed more things the new government couldn’t do than listed what it could do.  To quell everyone’s fear that they just replaced one far away central power (the British Crown) with another far away central power (the central government of the United States).  Especially when it came to taxes.  Raising taxes required approval by two houses of Congress and by the President.  Making it difficult to raise taxes.  The way Americans liked it.  For Americans didn’t like paying taxes.  And still don’t.

Getting the new Constitution ratified wasn’t a walk in the park.  The size and power of the new central government appalled those Patriots who worked so hard during the Revolution.  James Madison, the Father of the Constitution, joined forces with Alexander Hamilton and wrote a series of articles arguing for ratification.  The Federalist Papers.  And were successful.  Then when Alexander Hamilton was putting the Constitution into action as Secretary of the Treasury in the Washington administration, Madison didn’t like what he saw.  For Hamilton wanted to use the power of government to make the United States an economic superpower like Britain.  His opponents, though, saw a man who wanted to be king.  So Madison joined the opposition.  Led by Thomas Jefferson.  And the politics got ugly.  Before it was done the Jefferson camp would write about an affair Hamilton had.  And the same muckraker who exposed this affair would later write about a Jefferson affair with a slave.  Sally Hemming.  The people in the different camps hated each other.  Especially Hamilton and Jefferson.  They hated each other with a passion.  But they were principled men.  For when the election of 1800 came down to either Thomas Jefferson or Aaron Burr, Hamilton backed his archenemy.  Thomas Jefferson.  Both Jefferson and Burr were scoundrels as far as Hamilton was concerned.  But at least Jefferson was a principled scoundrel.  Burr took great offense to some things Hamilton said about him around this time.  And challenged him to a duel.  In which Hamilton suffered a mortal wound.  Pity.  For Hamilton was a true Patriot.  And perhaps the greatest treasury secretary the United States ever had.

It’s not the Spirit of Alexander Hamilton, Thomas Jefferson or James Madison that lives on in Politics but Aaron Burr

Funny how things change.  The new nation almost didn’t survive because of the opposition towards a strong central government.  And towards federal taxes.  Now federal spending includes just about everything under the sun.  Most of which the Framers excluded from the Constitution.  And the taxes!  They have reached a level none of the Founding Fathers thought would ever be possible.  Even Hamilton.  He was ‘big government’ for his day but he would be disgusted to see what became of his beloved Treasury Department.  And the money they pull out of the private sector economy.  Not to make America an economic superpower.  But to buy votes.  And for personnel gain.  The true underbelly of democracy.  Where people come to public service not to serve.  But to enrich themselves at the expense of the taxpayer.  Like that scoundrel that killed him.  Aaron Burr.

Even worse they use fiscal policy to further their spending ways.  The federal debt grows.  And now whenever a recession rolls around they use Keynesian fiscal policy to ‘lessen’ the affects of the recession.  Which is just a clever way to keep on spending after they’ve run out of money.  Because this spending is now stimulus.  And if the government stops spending it will make the recession worse.  Clever.  And it’s just coincidental that friends of the administration benefit most by this Keynesian stimulus spending.

It would appear it’s not the spirit of Alexander Hamilton that lives on in Washington.  Or Thomas Jefferson.  Or James Madison.  It’s the spirit of Aaron Burr.  Scoundrel extraordinaire.  And role model for the political elite.


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LESSONS LEARNED #73: “Politics is about overspending and vote-buying while getting some poor dumb bastard to pay for it.” -Old Pithy

Posted by PITHOCRATES - July 7th, 2011

Great Britain’s Costly World Wars

The 18th century was a time for adventure.  Exploring brave new worlds.  Discovering new species of plant and animal.  And new peoples.  But most of all it was a time for war.  World war.  As the great mercantilist empires raced to establish colonies in those brave new worlds.  And bumped into each other in the process.  Great Britain, Prussia and Portugal fought against against France, Spain, Austria, Russia and Sweden in the Seven Years’ War.  They fought for control of trade routes.  And each other’s colonies.  They fought from 1756 to 1763.  In Europe, Asia, Africa, South America, North America, the Caribbean, the Philippines and on the high seas.

Great Britain’s secretary of state, William Pitt, committed to total war.  He went all in.  Thanks to his allies fighting in Europe on land he had armies available for the colonial theaters.  And he had the Royal Navy.  That ruled the seas.  It was a formidable force.  And the British Empire grew.  From Gibraltar to the Indian subcontinent to the Philippines to the Caribbean.  And, of course, Canada.  It was a great victory.  But a costly one.  As total war tends to be.  And with more empire to manage and protect, Britain needed a larger standing army.  And a larger Royal Navy.  Costing even more money.  Especially in North America.  Where there was a lot of Indian activity on the frontier.  It only seemed fair to King and Parliament that their American colonists paid their fair share.  And the taxation started coming. 

The king needed money.  And the landowners in England were already overtaxed from years of war.  Taxing them further could cause problems in Parliament.  Because they had representation with their taxation.  But there was a lot of untapped wealth across the Atlantic Ocean.  The American colonies.  And they had no representation in Parliament.  So they would tax them to replenish the royal coffers.  And to help maintain the sprawling empire.  So they taxed.  And the Americans balked.  Then Parliament passed some acts to punish the colonists.  One thing led to another that led to a shot at Lexington that was heard ’round the world.  The American Revolution for independence from the British Empire was on.  And it, too, would be costly for Great Britain.  Eight more years of war.  And it would end with the loss of the American colonies.  Worse, it gave the French some ideas that led to the French Revolution.  And, ultimately, Napoleon.  That would plunge Great Britain back into another costly world war. 

Rhode Island:  Smallest State but Biggest Pain in the Ass

But Great Britain wasn’t the only nation with a large war debt.  The new United States of America also had a huge war debt.  And her finances were a mess.  People had debts.  States had debts.  And the Confederation Congress had debt.  Millions borrowed from Holland and France to fight the war.  And money was owed from before the war.  Including to British merchants that had to be honored for America needed trade with the British Empire.  And the protection of that trade provided by the Royal Navy.  So a lot of money was owed to a lot of people.  Which a lot of people didn’t have.  State legislations passed debtors’ laws that provided some relief to debtors by making it okay for them not to repay their loans.  Of course, this destroyed the credit markets.  Because people won’t loan money if the law says no one has to pay it back.  Worse, states were printing their own currencies.  And forcing people to accept it as legal tender.  Even though it wasn’t worth the paper it was printed on.  States were charging import duties on interstate trade.  Other states were charging some states more for their goods.  The love was gone.  States circled the wagons.  The war was over so they said screw the confederation .  It was a mess.  And soon after the war the economy was collapsing.

The United States was the Rodney Dangerfield of the international community.  It got no respect.  And most thought it was only a matter of time before they fell on their face and rejoined the British Empire.  The new nation needed legitimacy.  Which is hard to do when you’re broke.  You have no army or navy.  And the individual states were making their own treaties.  Making their own currency.  Collecting their own tariffs.  Life was simpler for the rest of the world when the Americans were British Americans.  For then she had a single seat of government to treat with.  A single currency.  A uniform tariff.  The Articles of Confederation just wasn’t getting it done.  So there was a drive to revise them to address some of these shortcomings.  Such as a national tariff to help pay down the national debt.  But one of the shortcomings was the revision process itself.  Any change required unanimous consent.  Which was a problem when it came to tariffs.

You see, tariffs are a source of revenue.  Imported goods come in on ships.  That have to dock.  In a port.  Before they offload a customs official reviews the manifest.  And verifies the cargo.  It’s simple math.  You have a list of what’s on a ship.  You apply a tariff.  Get your money.  Then you let the ships unload their cargo.  It’s very straight forward.  All you need is a port.  Which Rhode Island had.  And she refused to give up her right to collect those tariffs.  Because they collected a lot of revenue.  From her merchants.  And from all the merchants in the land-locked states that used her port.  It was very lucrative.  Her taxpayers loved it.  Because someone else was paying their taxes.  They were getting a free ride.  Thanks to those tariffs.  Which was great for them.  But it almost doomed the fledgling new nation.  Because whenever the Confederation Congress tried to amend the Articles of Confederation to include a national tariff, Rhode Island always voted “no.”  She refused to give up her cash cow.  Even if it meant the collapse of the new nation.  (Eventually delegates would meet in Philadelphia in 1787 and write a new constitution to replace the Articles of Confederation.  And some 100 years later America became a superpower.  No thanks to Rhode Island, of course.)

The EU and their Mercantile Emissions Trading Scheme

A clever government is always trying to think of ways to get other people to pay for their excessive spending.  And by ‘clever’ I mean devious.  To find some dumb bastard to pick up their tab.  Preferably not their own taxpayers.  Especially taxpayers who vote.  Because that’s the funny thing about taxpayers.  They don’t like paying taxes.  They will because they understand certain public goods require public funding.  Like an army and a navy to protect their nation from foreign enemies.  They’ll pay for these because they don’t want to be invaded or have their cargo ships boarded by pirates on the open seas.  But they’re not going to willingly pay for a big fat welfare state.  Not if they have to make sacrifices in their own lives so others don’t.  That’s just slavery by another name.  People just don’t like oppressive governments that take their money.  Or their liberty.  But if they could get some nice government benefits without having to pay for them, why, that’s a different story.

This is a lesson governments have learned well.  This is the basis for socialism (from those according to ability to those according to need).  And the progressive income tax (the more you earn the more you pay).  You get the smaller group of rich people to pay more than their fair share.  Then you take their money and spend it on the larger group of poor people who will forever love you.  And vote for you.  It’s a sound theory.  Until you can’t raise taxes anymore without throwing the economy into recession.  Or causing a taxpayer revolt.  So advanced nations that can’t tax anymore have found other sources of revenue.  Thanks to global warming.

Global warming is a hoax created to impose more government control over our lives.  To create more fees.  And a font of new taxation.  The University in East Anglia led the charge in this false science.  Leaked emails have since proven that they did play with the numbers to advance their agenda.  Though debunked it still has deep roots in the UK.  And Europe.  They refuse to let it go because of the riches it promises to deliver.  And with the UK and Europe suffering debt crises, they need those riches.  And the European Union is acting bold.  And extralegal.  They created an Emissions Trading Scheme (ETS).  Anyone that produces carbon dioxide has to pay for that privilege.  And that ‘anyone’ is pretty much everyone in industry and transportation.  By buying permits that ‘allow’ you to emit this product of combustion.  Including all international flights flying into EU airspace.  Which the non-EU airlines have a problem with.  Who are already struggling under the high cost of fuel.  But the EU is standing firm.  To save the planet.  And coincidentally pouring vast sums of money into their coffers.  So they can transfer the cost of their irresponsible government spending to non-Europeans buying tickets to travel to Europe.  But this can’t end well.  Other nations will respond with some measures of their own to ‘tax’ EU planes coming into their airspace.  Worse, when they can no longer sell the fraud of global warming to a gullible people, the nations who bought those permits may want their money back.  To help with their own irresponsible spending.  And with the sums involved, they will no doubt exhaust no legal avenues.  Perhaps even exploring other avenues.  Something extralegal.  Just like they did in the EU when they set up their ETS.

Spend First, Pay Later, then Suffer the Consequences

That’s the problem with spending first then trying to figure out clever ways to get someone to pay for that spending later.  Politicians tend to look at short-term benefits.  Not long-term consequences.  Had Great Britain known what the ultimate price would be for their tax policies they no doubt would have pursued a different course.  And avoided the 8 years of the American Revolutionary War.  And the subsequent Napoleonic Wars.  Which all added up to quite the pretty farthing.

Of course, Great Britain’s woes go back to the costly Seven Years’ War.  Which grew out of a trade war.  Resulting from the mercantile policies of competing empires for overseas colonies.  And trade.  The EU’s ETS is sort of a throwback to those mercantile policies.  That may very well result in a trade war itself.

Funny how history repeats.


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LESSONS LEARNED #33: “The Founding Fathers weren’t perfect but they were closer than most.” -Old Pithy

Posted by PITHOCRATES - September 30th, 2010

Anarchy Averted

Washington men didn’t live long.  And George Washington thought about that.  A lot.  He loved his Mount Vernon.  His garden.  And he longed to retire there to spend out his years in peace under his vine and fig tree.  But he gave up that dream when he accepted command of the Continental Army.  He was already at that age when a lot of Washington men died.  So when he left, no doubt he thought he may not return.

The Revolutionary War lasted 8 long years.  And Washington spent those years with the army.  In the field.  He was at Valley Forge.  He didn’t leave to go home to see Martha.  No.  His wife came to Valley Forge to see him.

Washington was a wealthy man.  He didn’t need to make these sacrifices.  A lot of wealthy men didn’t.  But he did.  And he sacrificed a lot.  Even his eyesight.  When the army officer’s wanted to mutiny over a long list of failed promises (pay, pensions, etc.), Washington pleaded with them.  To not throw away the thing they’ve fought so long and hard for.  As poorly as the Continental Army was treated, those words did not move them much.  Then Washington pulled out a letter from a congressman to read to them.  But couldn’t.  After stumbling over a couple of words, he stopped.  He then pulled out a pair of spectacles.  No one had ever seen the great George Washington in such a public display of weakness.

“Gentlemen, you must pardon me,” he said.  “I have grown gray in the service of my country, and now find myself growing blind.”

Some cried for the old man who had given so much.  When he no doubt had so few years left to live.  If their commanding general could make such sacrifices, so could they.  So there would be no Caesar.  No Cromwell.  No armies would march to the seat of power.  This republic would not collapse into anarchy as history often scripted her republics.

The Most Powerful Man in America Surrenders His Power         

But would he be king?  He could have.  Easily.  He had the power.  And the love and adoration of the people.  In fact, some were begging him to become king.  Others, though, questioned his intentions.  They looked at the army with a nervous unease.  They were, after all, a nation built primarily from English stock.  And they knew their English history.  Of Oliver Cromwell.  The New Model Army.  Just what were his intentions?

He still stayed in touch with his officers (and later would go on to be the first president of the Society of the Cincinnati).  This seemed a bit ominous to some.  This is why once the war was over, people tried to forget about and disband the army as quickly as possible.  To renege on the promises they made to these veterans.  They just wanted these soldiers to go away.  There were too many bad memories of standing armies in their midst.  Whether they wore a red coat or a rag, they just wanted them gone.

Even King George questioned his intentions.  Few give up power.  If he did, it would place him in the pantheon of greats.  But would he?  Yes.  He would.  And did.  Washington would be a Lucius Quinctius Cincinnatus, the Roman farmer who walked away from his plow to assume dictatorial powers to help save his nation.  When the threat was past, he returned power to the Senate and returned to his plow.  And so did Washington.

Answering the Call of Duty.  Again.

Then the nation called for their Cincinnatus once again.  There were problems with the Confederate Congress.  It was having difficulty governing the peace.  There were state rivalries.  Their finances were in a mess.  And there was no national identity.  There used to be.  British.  And the European nations treated with that singular entity.  Great Britain.  Now that the mother country was gone, there was no singular entity.  No unity.  Everyone was for themselves.  And the European powers had to make multiple treaties with the multiple states.  If they wanted to go through that headache.  And many did not.

Some called for a revision to the Articles of Confederation.  But it was difficult to get the states on board.  A weak confederacy favored the individual states.  And the individual states liked that.  But it also limited their potential as a nation.  Some feared the inter-state rivalries would balkanize the nation.  Make the New World a repeat of the Old World.  To bring the nation together would take an extraordinary effort.  Or an extraordinary man.  George Washington.  Who agreed to attend the Philadelphia Convention in 1787. 

After a long and hot summer, the Philadelphia delegates produced a constitution.  With James Madison being the primary architect.  They then sent it to the states for ratification.  At which time James Madison and Alexander Hamilton began a writing campaign to urge its ratification.  (John Jay contributed to this campaign, too, but not as much as Madison and Hamilton).  Once ratified, it came time to populate the new government.  Some competed with each other for some positions.  But for one of the positions there was unanimity.    There was but one man the people would trust with the most powerful office in the land.  Their Cincinnatus.  George Washington.  But would he do it?  Would he leave his blissful retirement beneath his vine and fig tree?

Yes.  Not because he wanted to.  More than 10 years had passed since this old man had agreed to command the Continental Army.  He had outlived many Washington men.  The way he saw it, he was living on borrowed time as it was.  And there was another consideration.  Against the greatest of odds, he did NOT lose the Revolutionary War.  He had made mistakes in his life, but his name was safe for posterity.  But if he took a risk now he could lose the good name he built.  And if there was anything soldiers (and politicians) worry about, it’s their legacy.  (That’s why they write memoirs.)

Another Long 8 Years

When it was clear that he was, in fact, the indispensable one, he sacrificed his personal want for the public need.  Again.  And again, serving a second term as president.  He was ready (and looking forward to) retirement after one term.  But the party politics were threatening to tear apart the new nation.  The rift between Jefferson and Hamilton had grown.  It was splitting the government into two camps.  The Federalists (led by Hamilton) and the anti-Federalists (led by Jefferson).  They pleaded for Washington to serve a second term as he was the only one who could hold them together.  He consented.

That second term was particularly unpleasant for Washington.  Party attacks turned into personal attacks.  Even against Washington.  And the ugliness got really ugly over the Jay Treaty.  Many wanted war with Great Britain.  But having actually fought a war with Great Britain, Washington favored peace.  Yes, the treaty favored Great Britain.  And, yes, it tied American interests to Great Britain, not her war time ally.  France.  The Jeffersonians unleashed an unfettered vitriol on the Federalists.  Including Washington.  But Washington bet on the right horse.  Great Britain proved to be the dominant European power.  And her Royal Navy came in handy protecting U.S. trade with her.  Over a decade of peace and prosperity followed. 

After 8 years, though, there was no persuading Washington for another 4-year term.  He had grown ever older in the continued service of his country.  Now he felt it more than ever that his days were few.  Rarely did he know happiness like he felt at the inauguration of the 2nd president, his vice president, John Adams.  Adams wrote that after he took the oath of office, Washington said, “Ay! I am fairly out and you fairly in!  See which of us will be happiest!”  He may not have actually said this but he no doubt felt the sentiment.  And with that, he returned to his plow.  Cincinnatus had come home.  Where he would happily live out his remaining years.  All two of them.

Where is Our Cincinnatus?

Today it’s about money and power.  Not duty.  Today, people want to be full-time politicians.  For the money and power.  And the elitist status.  People get into Congress and they just don’t want to leave.  Should we vote them out of office, they have a tantrum.  They call their constituents stupid for not knowing who the better candidate was.  And they won’t go quietly.  Some will change parties.  Or run as an independent.  Or as a write-in candidate.  Anything to stay in Washington.  To hold on to their power.  To stay among the elite.

The nation has deviated far from the path of disinterested public service of the Founding Fathers.  The anti-Federalists would be shocked to see what became of the government they helped create.  Even the Federalists.  Even Hamilton.  Not even he, the champion of a strong federal government, would approve of the federal government today.  His mercantilist polices had the goal of making the nation rich and powerful.  Not to suck the wealth out from the private sector.  Which began in earnest with Wilson.  Then picked with FDR.  Then ramped up further with LBJ/Nixon/Ford/Carter.  Had Hamilton lived in the 20th century, he would have earnestly campaigned for Ronald Reagan.  To put an end to the public sector’s pillage of the private sector.

And now we find our nation adrift again.  But who will step in and stop it today?  Who is out there?  Willing to put down their plow for disinterested public service.  And by ‘plow’ I mean any real job.  Worked by someone who is not part of the Washington establishment.  Where is our George Washington?


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