FUNDAMENTAL TRUTH #87: “In a democracy you hold the keys to the treasury. So be careful of what you ask for.” -Old Pithy

Posted by PITHOCRATES - October 11th, 2011

The Founding Fathers Purposely made it Difficult for the New Federal Government to Spend Money

Benjamin Franklin knew.  He knew what would happen once the people learned they held the keys to the treasury.  “When the people find they can vote themselves money, that will herald the end of the republic.”  All the Founding Fathers knew this.  This is why they created a representative government.  They put other people between the people and the treasury.  A lot of people.  Responsible people.  People who knew better.  Or should know better.

It started with the separation of powers.  The country needed a leader.  But they didn’t want a king.  They wanted a leader with limited powers.  So they limited the president’s access to money.  The Founding Fathers gave the power of the purse to the House of Representatives.  The president could only spend the money Congress allowed the president to spend.  The president could veto spending.  But Congress could override this veto by a two-thirds majority in both the House and the Senate.  So the president can try to stop spending.  But he simply can’t spend at will.

But neither can the House.  Because the Senate has to approve any spending initiated by the House.  Before it can even get to the president.  The Founding Fathers purposely made it difficult for the new federal government to spend money.  To limit the power and breadth of the federal government.  By limiting its money.  Even after the president signs it into law.  Should any questionable spending pass both houses, and the president approves it, we can still challenge it.  By the third branch of government.  The judiciary.  Which further checks the power of federal government.  On the rare occasion when the federal government passes bad legislation.

As Originally Written in the Constitution the States’ Legislatures Voted for a States’ Senators

Back at the Founding the states were very powerful.  They were nation-states.  Joined together only by a loose and weak confederation.  And very suspect of any distant, centralized power.  Whether it be a king on the far side of the Atlantic.  Or a president on the near side.  To get the new Constitution ratified the Founding Fathers knew they had to appease the states’ concerns.  And they did that with the Senate.  The states’ house.

As they originally wrote the Constitution, we elected the members of the House of Representatives by popular vote.  But not the Senate.  The states’ legislatures voted for their states’ senators.  These state legislators who we elect by popular vote in their states.  This put even more people between the people and the treasury.  And gave the states a way to rein in a federal government that strayed too far from their Constitutional boundaries.

But that all changed with the Seventeenth Amendment (1913).  At the dawn of big, progressive government.  When great amounts of power transferred from the states.  To the growing federal government.  And the spending began.  The states’ legislatures no longer voted for states’ senators.  The people now voted for their senators.  By direct popular vote.  And got closer to the national treasury.

Growing Spending and a Declining Population Growth Rate required Higher Tax Rates and Class Warfare

The federal government grew as we removed these other people from between the people and the treasury.  Responsible people.  People who knew better.  Or should know better.  Now people were closer to the federal treasury.  And they slowly learned what Benjamin Franklin feared.  They learned that they could vote themselves money.  And did.

Responsible, limited government went out the window.  Pandering for votes was in.  Rugged individualism was descendant.  And the nanny state was ascendant.  Federal government spending grew.  Federal taxes grew.  And federal debt grew.  Because you won elections by giving people stuff.  Paid for with other people’s money.  Which was key.  You didn’t win elections by raising people’s taxes.  You won them by raising other people’s taxes.  And the way you do that is with class warfare.

In the beginning class warfare was easy.  Because the federal budget was a lot smaller than it is today.  So you didn’t need very high tax rates.  And the population base was growing.  A lot of families had closer to 10 children than the 2.3 children of today.  So having lots and lots of new taxpayers in subsequent generations would produce a steady and growing stream of federal tax revenue.  But as spending grew and the population growth rate declined, that caused revenue problems.  Requiring higher and higher tax rates.  And more and more bitter class warfare.

The General Trend of Defining ‘Rich’ Downward has Redefined the Middle Class as ‘Rich’

With the higher spending and falling revenue budget crises followed.  Which ramped up the class warfare.  Pitting the ‘rich’ against the poor and the middle class.  Of course they kept redefining ‘rich’ as they needed to raise more and more tax revenue.  First calling the superrich fat-cat industrialists and Wall Street bankers ‘rich’.  The billionaires.  Then they included the millionaires.  But when they could no longer pay for the growing cost of the federal government people earning less and less were lumped in with these super rich.  Until today it’s someone making as little as $250,000 a year.

Anyone who says these people should pay their fair share should understand the general trend of defining ‘rich’ downward.  And that line that defined ‘rich’ has moved a long way down.  Closer and closer to the middle class.  Like those earning $250,000.  Many of these people aren’t rich.  Not by a long shot.  Despite earning $250,000.  They’re small business owners.  People who risk everything to run a restaurant.  Or start a construction business.  The number one and number two type of business that fails.   Because they can’t cover their bills.  And grow their businesses.  Despite having business income of $250,000.

The problem isn’t that the rich aren’t paying their fair share of taxes.  It’s that the government is spending too much.  In their eternal quest to buy votes.  By granting more and more government largess to the poor and middle class.  Courtesy of the rich.  Who will soon be anyone with a job.  Because of that growing federal spending.  And a declining birthrate.

Today’s Benefits are Paid by the Rich and Future Generations

As Benjamin Franklin feared this spending is threatening the health of his republic.  And governments around the world.  Because people learned that they could vote themselves money.  And politicians were only too glad to oblige.  Promising ever more.  In exchange for votes.  By providing ever more generous and growing government benefits.  Confident that they didn’t have to pay for these costs.  Instead, they could simply pass the cost of this largess to future generations.  Who don’t vote today.

So today’s benefits are in fact paid by the rich.  Who are small in numbers.  And future generations.  Who aren’t voting yet.   You see, it’s easy to provide benefits today.  That helps garner votes for today.  When the costs of these benefits will be borne by a subsequent generation.  A generation so far out into the future that they have no say today.  But over time this future generation has gotten closer and closer to the current generation.  So close that people alive today will be paying for benefits of today.  More importantly, this future generation is already voting today.  And that’s a BIG problem for a growing government.  So expect the class warfare to get uglier still.

This could herald the end of the republic.  Unless the current generation learns that they are in fact the future generation.  And that they are the new ‘rich’.  Regardless of how much they earn.  And they’ll learn this fast as they pay for everyone else.  After which they’ll see that there’s nothing left for them.  Then they’ll take notice.   And stop the insanity.  Then, and only then, will they stop voting themselves money.

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FUNDAMENTAL TRUTH #60: “Fool me once shame on you. Fool me twice shame on me. Fool me again shame on public education.” -Old Pithy

Posted by PITHOCRATES - April 5th, 2011

The Founding Fathers’ Experiment in Self-Government

Benjamin Franklin said when the people find they can vote themselves money, that will herald the end of the republic.  Because people tend to be greedy.  And lazy.  And they don’t understand public finance.  Especially the uneducated ones.  And there were a lot of uneducated people during our founding.  The Founding Fathers worried about this.  Because governments past have always exploited the uneducated for personal gain.  Kings and lords would give the poor some alms to make them feel good about their lives of unending toil and suffering on the feudal estates.  Should you not be lucky enough to have been born with the ‘right’ last name.  The new United States of America was going to change that.  Here it wouldn’t matter who your father was.  Here, no one would be better than you.

But only if this experiment in self-government succeeded.  So they were very careful when they wrote the Constitution.  And the type of government for the new nation would not be a democracy.  Instead, they chose a representative republic.  For the Founding Fathers all feared democracies.  Which when you come down to it is nothing more than mob rule.  If the mob is racists they’ll pass racist laws.  If the mob is sexist, they’ll pass sexist laws.  And if the mob is greedy and lazy, they’ll vote themselves money from the federal treasury.  This is the risk of democracy.  All you need is a majority.  And whatever you want is yours.  No matter how destructive it is to the country.

That’s why the Founding Fathers did NOT give us a democracy.  We have intermediaries between the mob and the actual law-making.  We call these people our representatives.  At the founding, these were the best of the best.  Well educated and/or experienced.  Men of great honor and integrity.  Imbued with a selfless sense of duty.  These men went out of their way NOT to prosper from their government service.  Really.  It’s nothing at all like today where government service is nothing more than a ticket to a fat pension and early retirement.  Back then such a thought was anathema to the Founding Fathers.  Which is very evident by the type of government they created.

Indirect Elections temper the Populist Tendencies

The Constitutional Convention was a hot, miserable, long summer in Philadelphia.  There was little agreement.  No one liked the final product much.  But most agreed it was the best that they could do.  Even then the U.S. was big.  Lots of different people trying to make the final product favor their state more than the others.  And few were in favor of giving the new central government much power.  They all feared that this new central power would consolidate its power.  And regulate the states to fiefdoms in a new kingdom.  Just like in the Old World.  So they took as many opportunities to restrict federal power.  And minimize the influence of the populist mob.

The new federal government was a limited government.  It was only to do the things the states couldn’t do well.  Maintain an army and navy.  Treat with other nations.  Those things that needed a singular national identity.  Everything else was to remain with the states.  And to make sure the states would not lose their sovereignty, the states’ legislators would choose their federal senators.  The House of Representatives would have direct elections.  Being the closest to true democracy, the House risked being influenced by the mob.  The Senate, then, would be wise and prudent to temper the populist tendencies of the House.  To keep the House from doing something stupid.  Like voting the people the treasury.  (Of course, the states lost a lot their sovereignty when we changed this by amendment to a popular vote like the House.)

The president was to be elected indirectly, too.  Like the senators.  The Founders were worried that the office of the president could be easily corrupted.  So they put great restrictions on its powers.  And made it as difficult as possible for any one group or interest to ‘cheat’ and get their man into office.  Hence the indirect election.  Again, to protect their sovereignty, this fell to the states.  State legislatures would choose electors who would then vote for president.  (With quite a few close elections, there have been calls to eliminate the Electoral College and replace it with a pure popular vote.  Of course, it is usually the loser in a close election who wants this change.  If the same thing happens in a subsequent close election where they win they are quite happy with the Electoral College.)

Talented People create things to trade

The reason the Founders wanted so many people between the voters and the actual law-making is to keep people from voting irresponsibly.  The federal budget is pretty big.  And people see that it is big.  They figure that because they pay taxes, there’s no reason why they can’t have stuff from the federal government.  In a true democracy, the people could vote to cut taxes and increase spending.  They could vote themselves a monthly stipend to live on and quit their jobs.  An uneducated mob can easily do this.  Who wouldn’t want to get a paycheck for doing nothing AND pay less in taxes?  It’s very attractive.  If I ran for office on such a platform a lot of people would probably vote for me.  But there’s a problem with such generosity.  You see, government can’t give money to people unless they take money from other people first.

There appears to be a popular misconception about public finance.  Many believe that government has a stash of cash that they can give out whenever they please.  And that this stash of cash has mystical power.  That it’s endless.  And when they give it away more just magically appears.  But the government has no money.  The public treasury isn’t filled with the government’s money.  It’s filled with our money.  That’s our tax dollars in there.  Or it’s borrowed money.  Borrowed money that costs interest.  Paid with our tax dollars.  Or it’s printed money.  Money created out of nothing.  Which makes our money worth less.  Which makes everything we buy more expensive.  We call this inflation.  You just can’t print money.  Because it just dilutes the purchasing power of the money already in circulation.  It’s like a bartender selling you whisky from a bottle that’s one part water and 4 parts whisky.  It not only tastes bad.  But you’ll have to pay more to get the same buzz from an honest bartender.

The reason why printing money doesn’t work?  Because it isn’t the money we want.  It’s the things that money can buy that we want.  Who sits in an empty room and enjoys looking at big piles of cash?  No one.  Take the cash out of your wallet or purse and see how long you can stare at it.  Probably not long.  Why?  Because it’s boring.  We don’t enjoy the cash.  We enjoy the things in the room we trade that cash for.  And this is key.  We trade.  We are traders.  Always have been.  And always will be.  We started out bartering for things.  You traded something you built (this is important) for something someone else built (equally important).  Talented people who created things met to trade.  And we still do this today.  The money just makes it easier to trade.  But this would not be possible if we all lived on a government stipend and nobody worked.  Because if no one worked, there would be no things to buy.  We would be sitting in an empty room staring at piles of useless money.

A Public Educational System that doesn’t Educate but Indoctrinates

The Founding Fathers understood all of this.  And they framed the Constitution accordingly.  They limited the powers of the federal government.  Minimized the amount of actual democracy/mob rule.  And minimized the amount of money in the federal treasury.  For they were capitalists.  They knew money left in the private sector stimulated local economies.  People created useful things.  Brought them to market.  And traded these useful things for other useful things.  That’s the way things were.  It’s not how they are now.  Politicians today are in politics for personal gain.  They pander to the voters.  Buy and sell favors.  Enrich themselves in the process.  And leave a swath of destruction in their wake.  And how are they able to do this?  Because the government has become more of a democracy than a representative republic.

Along the way the educational system failed.  Probably starting in the Sixties.  With the hippies in college.  Who went on to teach in the Seventies.  We spent less time on reading, ‘riting and ‘rithmetic.  And more on American white guilt for what happened to the Native Americans and a slave economy.  We learned less about the Founding Fathers.  And more about the people they wronged.  We learned less about American culture and more about diversity and multiculturalism.  We learned less about American Exceptionalism and more about American Imperialism.  We learned less about Western Civilization and more about ‘enlightened’ oppressive socialism.  We learned less about capitalism and more about the ‘fair’ redistribution of wealth.  Let’s face it.  Kids in school didn’t have a chance.  Their teachers were no longer teaching how America got to be exceptional.  They were teaching that America was anything but exceptional.  That we were guilty of every crime and injustice you could think of.  That America needed to change.  And that they, the young, our future, could make that change happen.

So the dumbing down of America began.  For those unable to escape the indoctrination of the new public education.  And the growth of government took off.  In fact, you can say that as society became ‘less American’ they became more dependent on government.  Where once rugged individualists dominated the land their numbers are thinning.  As slick politicians lure more people by the siren song of an easy life provided by government benefits.  And these politicians find the lie easier to sell with a public educational system that doesn’t educate but indoctrinates.  In fact, it’s quite an incestuous relationship.  The politicians spend more and more money on education.  The money goes to the teachers.  The teachers belong to unions.  The teachers’ unions support and donate to Democrat candidates.  So some of that tax money spent on education goes right back to the politicians that just increased educational spending.  And the teachers, eager to keep a good thing going, teach their students to become good Democrat voters.  Instead of teaching them about the three Rs, the Founding Fathers, American culture, American Exceptionalism, Western Civilization and capitalism.  As the standardized test scores show.  And does their irresponsible voting.

A Rising Sun or a Setting Sun 

America is fast approaching a crossroads.  People have learned that they can vote themselves money.  And have.  Politicians are pandering to these people for personal gain.  Offering to spend more and more money that we just don’t have.  Bringing us closer and closer to the end of the republic. 

Ben Franklin sat through that insufferable summer in Philadelphia.  Swatted at the giant horseflies in the hall.  He was old and his time was short.  He sat quietly during much of the debates.  Often staring at the sun carved into George Washington‘s chair.  He wondered if it was a rising sun.  Or a setting sun.  He saw it as symbolic of their little experiment in self-government and the work they were doing in that hall.  Was this already the end of their noble experiment?  Or was it just the beginning?  After the delegates voted to send the new Constitution to the states for ratification he breathed a sigh of relief.  For it was a rising sun.

I guess that question is once again open to debate.

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