Political Architecture and Economic Blueprint John L. Dobra, Ph.D. Associate Professor of Economics University of Nevada Constitution Week September 17,

Political Architecture and Economic Blueprint

John L. Dobra, Ph.D.Associate Professor of Economics

University of NevadaConstitution Week

September 17, 2007


• Conventional Wisdom is that the Constitution created the political architecture of the republic.


• Conventional Wisdom is that the Constitution created the political architecture of the republic.

• The same Conventional Wisdom holds that the economic implications of the Constitution are limited to naïve concerns about property rights, civil liberties and the powers of Congress.

Article I, Section 8 – Powers of Congress – is worth looking in detail in this regard


1. “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;”


2. “To borrow money on the credit of the United States;”

This is the basis for the issuance of Treasury Bonds, Bills and Notes as well as the creation of a National Bank


3. “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”

This was later named by the courts as the “interstate commerce clause”


4. “To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;”

This requires that bankruptcies are subject to federal law and go through federal courts.


5. “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”


6. “To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;”


7. “To establish Post Offices and Post Roads;”

The Postal Service provided a uniform and secure basis for commerce.


8. “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”

This is the basis for intellectual property law – patents and copyrights


9. “To constitute Tribunals inferior to the supreme Court;”

This allows the establishment of regional or “Circuit Courts” as well as specialty courts like bankruptcy courts and the Court of Federal Claims which mostly hears maritime cases.


10.“To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;”

This a matter of securing commerce.


11.“To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;”

This is also a matter of securing commerce.


17. “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;”

that THE private interest of every individual be a sentinelif POLITICAL societies enter into a larger society

the general THEORY of a limited constitutionthe latent causes OF faction

The

COMPOUND REPUBLIC of Americathe true springs BY which human conduct is actuated

men are ambitious, Vindicative and rapacious Men ought not to assume an Infallibility if angels were to govern, No government would be necessary ambition must be made to Counteract ambition justice is the End of government the necessities of a Nation will equal its resources Time must bring it to perfection

the best Oracle of wisdom, experience the system of each State within that state double Taxations Power being always the Rival of power double sets of revenue Officers the capacity of Mankind for self-government

The Political Theory of the Compound Republic

• “The design problem confronting the Philadelphia Convention according to Madison was one of ‘combining the requisite stability and energy in government with the inviolable attention due to liberty and to the republican form’”


• Proposition 1: Every person is presumed to be the best judge of their own interest– Straight out of Adam Smith’s Wealth of

Nations


• Proposition 2: No person is a fit judge of their own cause in relation to the interests of others. (Fed. #10)– Note the contrast with monarchial privilege

that created European Mercantilism


• Proposition 3: With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time. (Fed. # 10)


• Proposition 3: With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time. (Fed. # 10)– A similar point to Proposition 2, but with the

additional point that sovereignty must be broken up in a “Compound Republic” into multiple points of limited sovereignty with “checks and balances”.


• Proposition 4: Ambition must be made to counteract ambition (Fed. #51)


• Proposition 4: Ambition must be made to counteract ambition (Fed. #51)– This refers to economic ambition as well as

political ambition


• Proposition 4: Ambition must be made to counteract ambition (Fed. #51)– This refers to economic ambition as well as

political ambition– Competing economic interest groups is one of

the things Madison had in mind


• Proposition 5: The interest of the man must be connected with the constitutional rights of the place [i.e., position] (Fed. # 51)


• Proposition 5: The interest of the man must be connected with the constitutional rights of the place [i.e., position] (Fed. # 51)– Rights, civil or property, are subject to a set of

common rules


• Proposition 5: The interest of the man must be connected with the constitutional rights of the place [i.e., position] (Fed. # 51)– Rights, civil or property, are subject to a set of

common rules– In other words, no one is “privileged”.


• Proposition 6: The means ought to be proportioned to the end; the persons, from whose agency the attainment of any end is expected, ought to possess the means by which it is to be attained. (Fed. # 23)


• Proposition 6: The means ought to be proportioned to the end; the persons, from whose agency the attainment of any end is expected, ought to possess the means by which it is to be attained. (Fed. # 23)– Different decision rules should be used by the

executive, judicial and legislative branches.


• Proposition 7: In every political institution, a power to advance the public happiness involves a discretion which may be misapplied and abused. (Fed. # 41)


• Proposition 7: In every political institution, a power to advance the public happiness involves a discretion which may be misapplied and abused. (Fed. # 41)– Therefore, the power of any decision maker

should be limited


• Proposition 8: [T]he constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other – that the private interests of every individual may be a sentinel over the public rights. (Fed. # 51)


• Proposition 8: [T]he constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other – that the private interests of every individual may be a sentinel over the public rights. (Fed. # 51)– Note the role of “private interests” which

include economic rights.


• Proposition 9: The accumulation of all powers…in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, will lead to tyranny. (Fed. # 47)


• Proposition 9: The accumulation of all powers…in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, will lead to tyranny. (Fed. # 47)– This complements Proposition 8


• Proposition 10: By a faction, I understand a number of citizens who…are united and actuated by some common…interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community. (Fed. # 10)


• Proposition 10: By a faction, I understand a number of citizens who…are united and actuated by some common…interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community. (Fed. # 10)– A “faction” is a special interest group, most

commonly, economic interest groups.


• Proposition 11: Liberty is to faction what air is to fire. (Fed. # 10)– In other words, if people are free, they will

pursue their economic interests.


• Proposition 11: Liberty is to faction what air is to fire. (Fed. # 10)– In other words, if people are free, they will

pursue their economic interests.– And, moreover, that is the way it is supposed

to work.


• Proposition 12: If a faction consists of less than a majority, relief is supplied by the republican principle, which enables the majority to defeat its sinister views by regular vote. (Fed. # 10)


• Proposition 12: If a faction consists of less than a majority, relief is supplied by the republican principle, which enables the majority to defeat its sinister views by regular vote. (Fed. # 10)– Some have argued that Madison was a bit

naïve in his belief expressed here.


• Proposition 13: When a majority is included in a faction, the form of popular government…enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens. (Fed. # 10)


• Proposition 13: When a majority is included in a faction, the form of popular government…enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens. (Fed. # 10)– But, obviously, not totally naïve.


• Finally:

• To secure the public good and private rights against the danger of such a [majority] faction, and at the same time to preserve the spirit and the form of popular government, is then the great object to which our inquiries are directed. (Fed. #10)

Documents

Political Architecture and Economic Blueprint John L. Dobra, Ph.D. Associate Professor of Economics University of Nevada Constitution Week September 17,