by Jeff Matthews
Of Government, Banks and Corporations
The current financial times bring much distrust of government and its relations with banks and corporations.  And for good reason.  Government is but a tool for them. This is nothing new, nor is the recent bail-out anything new.
Thomas Jefferson and William Giles had something to say on the topic in the 1820′s, when John Adams was U.S. Secretary of State and setting his eyes on the Presidency.  Giles wrote a letter to the American people.  In it, he noted that Adams was corrupt.  He stated how Adams took $100,000 of the Treasury’s money and deposited it with Metropolis Bank, a local bank in which Adams sat on the board of directors.
Giles wrote:
Now, I would ask, with what propriety, or from what motive, the Secretary of State recently drew about 100,000 dollars out of the public treasury – or, what is the same thing, out of the Branch Bank at Washington, where the money was deposited to the credit of the Treasurer of the United States – and placed it in the Bank of the Metropolis?  …. But why, it will be asked, should the Secretary of State be thus friendly disposed to the Bank of Metropolis?  I answer – he has been a dealer in stocks in the local banks, and is now, and has for some time, been a Director in the Bank of the Metropolis.
…. Indeed it is a solemn fact and, upon record that the public treasure of the nation does some how or another, find its way into almost every local banking institution, and many of them rotten to the core, where individual public agents happen to be either Presidents, Directors, or Stockholders; or connected with said Presidents, Directors and Stockholders of said institutions.
Jefferson subsequently wrote in a letter to Giles:
You ask my opinion of the propriety of giving publicity to what is stated in your letter, as having passed between Mr. John Q. Adams and yourself. Of this no one can judge but yourself. It is one of those questions which belong to the forum of feeling. This alone can decide on the degree of confidence implied in the disclosure; whether under no circumstances it was to be communicated to others? It does not seem to be of that character, or at all to wear that aspect. They are historical facts which belong to the present, as well as future times. I doubt whether a single fact, known to the world, will carry as clear conviction to it, of the correctness of our knowledge of the treasonable views of the federal party of that day, as that disclosed by this, the most nefarious and daring attempt to dissever the Union, of which the Hartford convention was a subsequent chapter; and both of these having failed, consolidation becomes the fourth chapter of the next book of their history. But this opens with a vast accession of strength from their younger recruits, who, having nothing in them of the feelings or principles of ’76, now look to a single and splendid government of an aristocracy, founded on banking institutions, and moneyed incorporations under the guise and cloak of their favored branches of manufactures, commerce and navigation, riding and ruling over the plundered ploughman and beggared yeomanry. This will be to them a next best blessing to the monarchy of their first aim, and perhaps the surest stepping-stone to it.
If Jefferson is contrasting “the feelings or principles of ’76″ with “a single and splendid government of an aristocracy, founded on banking institutions, and moneyed incorporations,” then, we might as well ask what were “the feelings or principles of ’76?” It seems Jefferson is saying that the feelings and principles of ’76 were a common desire during the founding generation to limit the influence of aristocracy, banks and powerful corporations.  It seems that Jefferson, at least as he recalls those feelings and principles, was acknowledging the existence of a “class warfare” that current Republicans now deride. His concern was that the nation was headed in the direction of an aristocracy which would be “riding and ruling over the plundered ploughman and beggared yeomanry.” Under Jefferson’s view, the class war was being waged from the top-down, where the aristocracy aimed to ride rough-shod over the working class.
Aside from the “class-envious” liberals out there and a handful of libertarian-minded people who oppose a national state of oligarchy by powerful banks and corporations, are there any feelings or principles of ’76 held by the right? Consider some of the ideas Jefferson expressed as to how to deal with this problem in a letter he wrote to James Madison in 1785:
The property of this country [France] is absolutely concentrated in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not laboring. They employ also a great number of manufacturers and tradesmen, and lastly the class of laboring husbandmen. But after all there comes the most numerous of all classes, that is, the poor who cannot find work. I asked myself what could be the reason so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are undisturbed only for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be labored. I am conscious that an equal division of property is impracticable, but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not, the fundamental right to labor the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment, but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.
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Does the above writing sound like someone who is all too concerned with protecting the private property rights of Goldman-Sachs?  Perhaps when Jefferson writes elsewhere about the importance of private property, he is talking about the property rights of those people who he referred to above as “the most precious part of a state.”
In summary, when looking back to Jefferson and the principles of ’76, it would help to properly frame history as it actually existed.  Our founders did not go to war to preserve the sacred property rights of an aristocracy.  They went to war to crush the aristocracy and its miserable influence.  Now, here we are, 235 years later, and we have an aristocracy that has grown so large in size and influence, that it has the power to collapse the economies of the entire world and wreak havoc all throughout the middle classes.  Give that some thought…
Jeff Matthews [send him email] is a practicing attorney in Houston. He graduated from the University of Texas, School of Law in 1993 and was licensed that year.
Copyright © 2011 by TenthAmendmentCenter.com. Permission to reprint in whole or in part is gladly granted, provided full credit to the author and this website is given.
I would hope that people who read this article understand that there are no Republicans or Democrats, no liberals or conservatives, nor is there a left or right in Washington. There are only corporatists. Our government at both the federal and state level has abandoned all founding principles of this nation and become completely unresponsive to the people. Politicians and the media may pay lip service to the Constitution, to the middle class, and to the issues facing this nation but that is all. When we are told that citizens protesting the corruption of this nation (OWS) by monied interests are un-American or anti-American or commies or socialists, we would do well to remember the principles actually espoused by the founding fathers.
A lot of those protestors are protesting my right to keep the property that was freely disposed to me by another. Once you protest rich people who were enriched this way you are saying that free trades made between individuals should not occur. That is a violation of my right of contract that is protected under the ninth and tenth amendments. I'm all for protesting the federal reserve and corpratist institutions but these people are what we say they are when they protest free individuals who gotten wealthy by engaging in trade with others.
You assume too much. Engaging in "free" trade?
First, capitalism. as a theory, assumes an equal bargaining power on both sides. This does not exist in many cases.
Second, the tax system is definitely skewed in favor of the very wealthy. This promotes wealth inequality and shifts power to the top.
Third, what is so "precious" about a free market in an eroding system like ours where poverty is skyrocketing? There are plenty of people in China who will work for 50 cents and hour and a couple of cups of noodles a day. If that is the consequence of "free" trade, you can keep it. I don't want this country going in that direction.
Finally, let's put the concept of "fault" aside and simply ask if the rapid growth in wealth inequality in this country is harmful or beneficial. We don't need to worry about blame. We need to isolate the problem and fix it.
That is true that there is not always equal bargaining power on both sides because the person who needs something from another more than the other wants from him is always at a disadvantage. That is the just the nature of trade but you can't say that each person's power to enter into trade with one another somehow coerced from outside forces. It was coerced by an internal need which can only be a person's own free-will. The need to provide for themselves is undeniable because it is one that nature gave us. Perhaps when we get cyborge bodies that can provide everything we need all trade would cease to exist.
The rapid growth of wealth inequality is not a problem for two reasons. The first is that it is not immoral for wealthy people to exist as long as that wealth was accumulated through the process of voluntary exchange. I can understand if they went into each home and took a dollar involuntarily. Involuntary is theft while voluntary usually leads to a pleasant feeling between its participants. I'm happy to get a new car and the dealer is happy to get my cash. How can we say the happiness of both people is wrong?
The second is that the skyrocketing wealth inequality can't happen until those wealth people give something back for that wealth. Bill gates is rich because he made windows. It seems that the total wealth of cash and material goods is always balanced out when you add up all of the wealth and not just the cash.
You're too stuck on theory. That's the problem with the pursuit of philosophy when it is not founded on pragmatism. If wealth inequality is good, why do so many Mexicans come here illegally to find work? You certainly would not find agreement among our founders, and most notably, Jefferson: "…but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property…"
If absolute, free trade is so good, then why is Somalia screwed? It is a country without a functional government. It ought to be the land of your dreams? What went wrong?
"It seems that the total wealth of cash and material goods is always balanced out when you add up all of the wealth and not just the cash."
This is another unpragmatic statement. The little guys are out there working to eat. They spend their earnings on food. Food becomes feces. What happened to the value of what they received? It is gone down the toilet.
It seems you like to theorize in the abstract but pay no heed whatsoever to world history and all the pragmatic lessons that it offers. Did the French Revolution occur because gay marriage wasn't allowed? I dare say, "not." Why do revolutions occur? When you come to realize that every single one of them comes from a financially oppressed working class, your practical side will begin to grow.
The problem with Somalia is that it is probably ruled by warlords. I would not say that is the rule of law since each person is under the arbitrary power of these warlords. The benefits of free-trade probably doesn't exist there because it is much easier for some to gain favor with the warlords. Those warlords then go out and make sure the favored get advantages that the unfavored don't get. The wealth is stuck at the top since only a few are allowed to engage in activities that will create wealth for themselves. Can we say the same thing about are overly regulated economic environment of our nation?
Yes, we can. But then what about the rule of law? We have laws, right? What about the great degree of wealth inequality? Oh, that's right. You think it is a good thing.
Here's the bottom line, which will hopefully be painfully obvious. Nations do not suffer civil unrest from populous movements if everyone is reasonably prosperous. It doesn't matter if they are deserving or undeserving in the eyes of those who only view the world through the lenses of the old, Germanic work ethic ideals. What matters is happiness. If there was a reasonable distribution of wealth and opportunity in this country, I can tell you with confidence that TAC, The Tea Parties, Occupy Wall Street, 912, GOOOH and all those myriad groups would not even exist. There are a lot of teed-off people, and it is precisely because they have financial insecurity. Bill Gates and Warren Buffet are notably not active members of any such groups. "Some" inequality is good. The level we have is bad. What you are witnessing, which gives rise to all these groups, is the middle class eroding.
@Philosopherking-
The economic and political dynamic here in the USA isn't principally different than your warlord model of Somalia. We do it without the guns, that's about the essential difference.
Our wealth owners hire lobbyists (or buy legislators directly) to get favored advantage through law. This tipping of the tables via law results in accretion of wealth to those buying favors. Morally, it's not an iota different than if they had simply waltzed into your home and stole it.
Here's an example: If your occupation is investing, your rewards are taxed at 15%. If your occupation is plumbing, your rewards can be taxed at up to 32%. Now, after removing the arguable claims about why capital gains ought to be different than wages, you are faced with the reality that this rule was arbitrary and simply purchased by the wealthy who benefit most from it. CG could be 5% or 30% or 22.987% or 0%. It is arbitrary and has had many values over the years.
So, it is impossible to imply that criteria like limits on size of government or areas of regulation have any moral influence on outcomes. As other posters have pointed out sharply, the population ultimately only cares about the results. There's no system that can't be gamed is a simpler way to say it.
Why not just eliminate those taxes and go with a national sales tax. That should eliminate that problem right off the bat.
M.D. gets it. The privileged have more money than the working class, and thus, need only devote the tiniest of their wealth to actual consumption. A sales tax would be infinitessimally small on the super rich, whereas working class families would be hammered the hardest.
The tax should be thought of as a burden. It should be structured in a way that leaves everyone feeling equally injured by it. Read Jefferson's view on taxation in the main article above.
How about leaving the feeling that no one is injured by it as in don't tax anybody. Your way harms everyone equally but my way harms no one.
Your would have to abolish all forms of government. Please come back to reality.
I just said some particular forms of taxation. I'm OK with tarifs and sales taxes.
@Philosopherking-
Why choose the two taxes that place the heaviest burden on the poorest people?
The life burden for a minimum wage earner to pay sales taxes and tariffs on goods consumed is huge. That burden for someone making $20M is negligible and inconsequential. What is served by a policy like that?
It's interesting that what this comes back to immediately is a question of intentionally engineered inequity.
We could ask the question from the other direction and see if it changes our view. In other words, "Who benefits most from the infrastructure provided by government taxes – the richest or the poorest?"
Here's one bit of evidence: Look at the list of the world's most valuable companies. 13 of the top 25 are US companies. Here's another: Look at the list of the world's billionaires. The US has 412, the next highest country has 115. There is undoubtedly a correlation between infrastructural value and security, and the ability to make a lot of money.
In that light, he who is getting the highest benefit might be obliged to pay the highest part of the cost.
What is a privilege? It is grant from someone else. Its a pretty easy working definition as in we have the privilege to post on this website. Its a grant from the website owners but where does the grant to be rich come from? Who grants it? I can't find any law that grants a privilege to these specially chosen people and yet denies it to the working class.
I'm looking around and have not found it. Perhaps that 'privilege' exist because other people provided it to them. Shame on them for giving all the money they have to these people. Why do they continue to buy the good created by them? The foolish masses are only making the rich richer. They should stop buying food, shelter, and transportation so we can stop the madness of the rich getting richer. We can all then live on little communes and have all our needs provided for. I don't know how that will happen but if I wish upon a star I'm sure someone will be glad to make me a free ipod.
You are utterly lost. Privilege comes from being in a position to convince leaders to use other people's money to bail them out. Privilege comes from lucrative contracts. Privilege comes from the power to lobby leaders for programs in which you have a direct, financial interest. You need to study how government works a little more.
Those poor politicians. I didn't know they were the victims in all of this. Were they being exploited by rich people?
No, they were, and are, pimping out the working class to their rich cronies. Do you seriously doubt this? You can't be serious.
I seriously do since I don't run an employment agency. Those evil employers. We have to many employers in this country right now which is why the unemployment rate needs to go from 9% to 90%.
@Philosopherking-
Privilege can be granted, that's one form. It can also be ill-gotten, which is by far the more common form. History doesn't actually occur in chapters, so there is no convenient start and stop points for us to examine cleanly to see this in action. We'll have to simply wade into the running river here, ok?
Stepping in now….If you look carefully at the last enormous crisis and bailout of the banking structures, you will see that there were first crimes committed. Large scale frauds on a national scale. We can get into that minutiae if you wish, but for now, I'll take it for granted. Those crimes led to accumulated fortune which had nothing to do with the masses purchasing iPODs, or groceries. Once those fortunes were obtained by such frauds, it purchases more favor, and the wheel turns once more.
Just roll the clock back further to see the enabling cycles of fraud and bailout and mischief in a succession of cycles. You could go back to Mr. Columbus with his sword, and you would have the point of privilege understood.
I suppose we all underestimate crime and mischief when it comes to governance, because we are intentionally, at all times, drawn away from it by the information organs of the mischief makers. e.g. The NYT and the WSJ and NBC, to put a face to it.
One chief enabler of the frauds is of course the chartering of corporations. When the Hooker Chemical company for years avoided cost by dumping toxic waste at the Love Canal, that was a fraud. A very profitable one, and a very typical one as we have all come now to understand. This kind of fraud creates huge pools of capital, which are never recovered even when prosecuted successfully, which is rare. The huge accumulations of capital – obtained through fraud in conjunction with the charter privilege – are used to buy sequentially more privilege.
Individuals in the masses can not easily aggregate the capital necessary to purchase legislators. Corporations are natural vehicles for this process. That's how privilege is created. (Note: It's not to say all corporations are fraudulent. Only that enough of them are to supply the necessary privilege to tilt the tables.)
Privilege is an interesting and critical concept in this argument. Here's a wonderful example, as written by Alan Kohler a few days ago.
QUOTE
The US Banking Act of 1933, commonly called Glass-Steagall, enforced the separation of investment banking (the issuing of securities) and commercial banking (accepting deposits and making loans).
It was repealed after Citibank, in flagrant contravention of the act, announced the acquisition of the investment banking giant, Salomon Smith Barney, in 1998.
Alan Greenspan, then chairman of the Federal Reserve Board, colluded with the president of Citibank, Sandy Weill, by using an obscure provision of the Bank Holding Company Act that allowed the merger to go through temporarily – with two years grace to divest the investment bank operations.
Greenspan then pressured Congress throughout 1999 to repeal the Glass-Steagall provisions, which it eventually did in November that year with the Gramm-Leach-Bliley Act – a law that led directly to the global financial crisis of 2008.
Banks were able to use the privilege given to them to "issue currency", as Jefferson put it, by leveraging their capital far more than any other company – 92 cents of every dollar deposited with a bank can be lent out as fresh money to someone else, thus creating money out of thin air.
After November 1999 the newly-freed banks went berserk, leveraging their capital far more the normal 12.5 to one by using financial engineering and by trading derivatives to increase profits and create huge bonuses for the executives, who rapidly became a kind of plutocracy, controlling vast wealth and running the country.
As we know, they got into trouble and had to be bailed out by US taxpayers.
END QUOTE
I think that adequately describes the way privilege both arises and is used. Now words like "colluded" are used in journalism because they dare not say "defrauded" or "stole" or any of the actual descriptions for this kind of activity lest they get their pants sued. But, I think we all understand – all but the most naive – what is meant.
Thanks for supporting the OWS movement with such powerful historical context Mr. Matthews.
Seriously?? You take this article as supporting the OWS folks? I certainly agree that there is and has always been an oligarchy taking control or influencing government for their benefit but these OWS folks are economic idiots who don't understand that a just government protecting a free market of voluntary exchange would still have some who are wealthier than others due to many reasons such as intelligence, harder work, foresight, creativity or what have one. They ( and clearly you) don't understand that the only way to stop plundering by the elites is a limited government, restricted to a justice system protecting property rights, not granting privileges to any group. This would confine a just and legitimate government to a justice system and police/military force to enforce the decisions of the justice system and augment the people's right to self defense.
Aside from media reports, do you actually know what those "economic idiots" propose? Do you know what their arguments are? The simple fact of the matter is that our economic system is not free and it is not a voluntary exchange. The premise that limited government or free markets are a panacea is misguided. Your assertion of the function of a "just and legitimate" government doesn't jibe with the Constitution.
OWS, by and large, is protesting a government that serves the needs of corporations and is not representative of the people. A government that implemented laws benefiting HMO's after the HMO industry told them their plan was to insure everyone cheaply, ration healthcare, and make enormous profits. A government that implemented "Obamacare" because the insurance industry wanted a captive audience while the masses argue it is socialism. A system that promotes the illusion there are two parties with radically different ideologies and is rigged to prevent challenges to the system; two parties that are, in fact, one with a single self-serving purpose – maintain power at all costs. A government that promotes wealth redistribution from the poor and middle class to the affluent. A government that actively promotes the migration of jobs from this country to others; sacrificing American jobs to exploit foreign workers. We could go on all day long but the result is simple: This government serves the powerful, the rich, and itself, while the American public debates meaningless platitudes.
The American people are largely clueless and will demonstrate it in 2012 when we re-elect 90% of the incumbents. They already demonstrate it by claiming the OWS protestors are un-American, communists, or socialists. They already demonstrate it by appealing to the Constitution or Founding Fathers without understanding the motivation or principles of either. They already demonstrate it by listening to propaganda and reciting it like it is truth. They already demonstrate it by thinking the Republicans are the solution. They already demonstrate it by thinking the Democrats are the solution.
They already demonstrate it by acting as if we can't build a better mousetrap.
It is always interesting to see where all socialist arguments lead to. It leads to stronger and stronger government.
I always find that the moment someone claims something is socialism, they have no idea what constitutes socialism.
Your stronger and stronger government argument is a bit disingenuous as well. I understand you have fallen for the "smaller government" fallacy. I presume you are a believer in the Constitution. If you know the history of the Constitution, you are well aware the whole purpose of it was to foster a stronger, central government. Perhaps you can enlighten me as to how you believe you can logically be a member of both camps.
If I approve of giving an employee a raise today, does that somehow imply that I approve of them getting more raises indefinitely?
hopefully that helps unravel the idiocy of your query. Probably not, but it is still cool for me to see how people twist.
was that intentional misdirection? I wonder if anyone actually falls for such silliness.
Len-
First, it might not be the most effective strategy to attempt an assumption of what I do or don't understand. Surely, this isn't one of those kind of discussions, is it?
Of course the OWS protesters are "economically ignorant." Just as the general population is. They are reacting to direct consequences of the field they find themselves playing in. They don't need to know the disease diagnosis before telling the doctor they have pain. What you are seeing is the pain.
Wealth inequity is not the question. The magnitude of that inequity is the question, and it is always the historical question. Populations are surprisingly tolerant of a great amount of inequity. But there is always a point where the tolerance ends, and it doesn't end intellectually with an analysis of macro-economics or political doctrine. It ends when the pain can not be tolerated. The media are playing dumb here (well, what else is new?) by continually expressing the idea that the OWS don't have a list of formal demands. They have one demand – stop the pain.
Lots of talk about limited governments misses the objective that is ultimately not possible to ignore: pacification of the population. The state will always be used to enforce property rights, but it is crucial to see that there is no limit placed on this. It means, that no matter the size of any government – small or huge – what matters is the absolute measure of inequity. People in pain find no comfort whatsoever by saying to themselves, "yeah, it hurts, but we have a small government."
The oligarchs (doesn't matter what you prefer to call them) can just as easily manipulate small governments as large ones. The better focus is outcomes, not process. Thanks for allowing me to post.
I don't know where you are coming from on this but the question isn't about wealth inequality or how much but about the ability of people to decide what to do with their property. There is no way you can convince me that wealth inequality is bad or violates anyone's freedom. I just saw a much wealthier person and that person did not attempt to tell me what to do nor did he have the power to do so. That power only comes from the government not the wealthy. Wealth inequality is inconsequential to the role of government which is to protect the freedom of other people.
Right…… They just orchestrate wars and lobby for the good of the people. Such truly beneficent people, aren't they?
What about the ones that don't? Should we put them in a concentration camp when they haven't done those things? What about the ones that want to run away from government as far as they can and just want to make money? What do we do with them?
Which ones don't? Let's start there.
Ford Motor Co.
I'm suspicious of this entire article because Jefferson was against perigany* laws which basically established genuine aristocracies. They were laws that said that the first born ten generations of such and such family were always to own the land. It couldn't be bought or sold by another which didn't give other people the ability to work the land and make some use of it.
Well, check out the sources and confirm them on your own. Jefferson was a liberal. So was Thomas Paine. So were pretty much all of them. Of course, being mere mortals as they were, they were more or less corruptible to some degree, and as they rose through the societal ranks, we have seen subsequent manifestations of their corruption here and there. Some even quickly converted to conservatives and sold out to the new aristocracy – e.g., Hamilton.
I did check out the sources and never once said the text you presented was false. I'm saying that this could be in reference to property that was not a part of the free-market which is what many inheritance laws did which could explain why he wanted a graduated income tax on PROPERTY not income so that these people would be forced to sell that land and bring it to the free-market.
Not sure where you are going with this Jeff, but eighteenth century "liberals" and "conservatives" are not analogous to modern liberals and conservatives. You cannot just throw out those terms and expect people to understand what an 18th century "liberal" was. You also cannot attach the terms to individuals as if the term used today describes the individual two hundred years ago. Thomas Jefferson was NOT a liberal in the modern sense.
If that is not what you intended to mean, I apologize.
@ Philosopherking
Is wealth inequity bad? Does it violate anyone's freedom? Those are your questions.
Is inequity bad? It's bad for society because it creates a lot of unrest, anxiety, grief, loss of freedom, and pain. Just test the outer limits of this premise: Suppose one guy has all the wealth? We don't need to be pedantic here and flesh that out do we? Of course that would be bad. It would be an approximation of the Persian Empire.
This premise has been looked at scientifically also. It has been shown in study after study that societies with the least wealth inequity are healthier and happier than those with the most inequity. Just Google the GINI Index and associated studies, and you can examine all the evidence. It's clear and unambiguous.
Does it violate anyone's freedom? Sure it does. But to be a meaningful claim, we have to think of the violation as indirect, or secondary effects. In highly inequitable societies what sinks first?- democracy. This is too obvious to need much explanation. But here is the short of it. Wealth is power. When you concentrate wealth you concentrate power. I hope that is not arguable. Concentrated power is reduced democracy. So to make an example, in America there is something called a War on Drugs. This WOD is a product of the small privileged oligarchical power holders. Something like a prohibition against using marijuana is absolutely a violation of many people's freedom. And sure enough, when you look at the nations with lower wealth inequity one of the first things you see is a more liberal view of freedom. I think it is easy to correlate higher inequity with loss of freedom.
In both your questions, the answer is clear. Inequity is undesirable, all things being equal.
Wealth is power? It's potential power, but the only way someone's freedom is violated is when someone else forces themselves upon that person, or uses fraud. When you talk about concentrated power violating democracy, first of all democracy violates freedom, it forces people to negotiate rights with others, when a just government will be confined to a judicial system based on protecting rights, not a legal system used to grant privileges to one group or another. Secondly, you seem to be assuming the present oligarchal system to be in place.
As for society being harmed, society is merely a descriptor of particular associations between individuals and I find it frightening when people talk in the abstract of a corporate body, such as "society" rather than whether or not individuals are harmed. Once people start talking about society, then sure enough some individual or individuals will be sacrificed for society. Society, properly is that which is people voluntarily interacting with others, and so taking away a governmental role of forcing one groups will over another then society is not harmed, because individuals are not harmed, other than by their own choices or just the reality of life, and when I say harm here I'm referring to economic harm, not acts of violence. In fact there will be greater wealth for all, and certainly less pain when privileges are not granted through government.
Yes, in practice wealth is power. We need look no further than the electoral system to examine it's operation.
The rights, freedom and justice you invoke thereafter, are elements of various political theories, not assertions about the actual world we are living in. So, we could have a discussion about theory, or we could have a discussion about reality, but let's not mix them for the obvious reasons of confusion that results. (e.g. Just compare Hegel's freedom to your idea of it, to see how quickly confusion sets in when the discussion is on theory.)
Yes, we have a functioning oligarchy in general terms. And we have institutionalized corruption which comes along with it. That is where we stand. This oligarchy presides over a society which is entirely real and not abstract in any way. There's your starting conditions, and it has no connection of any interesting dimensions to political theories. For example, it might be claimed that you and I have certain theoretical rights according to a theory. But, in practice – on the ground here – the only rights you have are the ones you can personally defend. If you don't believe that, ask the family of Anwar al-Awlaki. And this is the reality in a stable nation. Imagine the reality elsewhere.
Political theory never finds exercise in reality. On the ground, the operation is always- culture evolving with human consciousness. That's true in the USA, in China, in Yemen, in Iran, in the UK. There may be some trappings of theory used as rhetorical markers for the various establishment powers, but these are always mere decoration. In the USA our window dressings are such things as democracy, justice, republicanism, inalienable rights and freedom. But when the head of the big bank goes to buy favor with legislators in order to perpetrate fraud on the population and crash the economy, what importance do these theoretical values hold?
Reform is always the question. I assume it is the question here. Can you avoid society and culture when speaking of reform? It's going to be quite a challenge. Culture doesn't follow political theories of any kind. There's no such thing existing as a libertarian culture, or a democratic culture, or a free culture. So any goal of reforms have to be the goal of working with culture to change it's direction or it's values.
The growing wealth inequity is harming the majority of individuals in the society because it is the result of immoral and fraudulent operations of the establishment powers. What could possibly be deemed beneficial about that?
M.D. and Jeff, what do you suggest as a manner of reform? There is lots of talk about what the problem is, but no solution offered. Can inequality (economically) be legislated out of existence? Said differently, can you legislate equality in outcome? Is the economic pie only one size and from there, it must be divided equally? Who gets to decide what is "equal?"
What reforms are we talking about here? Bastiat appeals to me. I happen to believe that the law has been perverted and legal plunder is, and has been, upon us for generations. The law is meant to protect life, liberty, and property. Wealth at the expense of another's life, liberty or property is unlawful. Wealth via force or fraud is unlawful. The law is not intended to create equality in outcome…it cannot. It is impossible and a fools errand to try.
Can inequality be legislated out of existence? This is your question. For starters realize that inequality was legislated into the system. Just superficially then, we can predict that anything legislated in, can as easily be legislated out.
Inequality occurs through the routine process of buying rules that favor the monied interests that can afford to buy such rules. Without getting highly technical (although we can if you like), such rules as the favorable tax rates on capital gains, or the new rules on bankruptcy, or barring state usury laws, or lowering marginal tax rates, or Gramm-Bliley, are all devices for tilting the economic playing field in one direction.
Let's look at a little evidence and get away from theories and abstractions, because they are all irrelevant in practice. In the era from the end of WWII to about the mid 1970s, all productivity gains were shared almost equally across all income groupings. That's symptom of good equity. It means that the rich get richer, and so do the middle, and so do the lower by roughly similar percentages.
Now, during that period, the top marginal tax rates were 70% or so. This compares to about 32% today. That push to re-write that marginal tax rule, didn't fall out of the sky as an accident, nor was it the result of some economic law, or political theory in operation. It was simply the top bracket using their capital to buy a more favorable rule. And why wouldn't they? If something like that is for sale, you can bet there will be buyers.
Your last paragraph, like many written on these pages, is about political theory. It makes the assumption that society adopts political theory of one name or another, and runs by it. That's false. Society operates on human consciousness interlocking with cultural morality. When you say something like "the law is intended to do this or that…" you are projecting a theory onto the culture, and pretending it is operative. It is not. The law does what law makers decide they need it to do. It is expedient, and reacts to the demand of the cultural leadership. Such strange laws as the Patriot Act, or the law which disallows the discharge of student loans, are simple examples of my meaning.
When you look at federal law over a period of a few years, you see it is almost exclusive about market making. That means, the law is primarily used to define commercial concepts and boundaries, and establish and regulate markets at the behest of the market participants. Example: The Telecommunications Act of 1996, is an industry desire to establish clear boundaries and guidelines for this specific set of commercial interests – a framework for doing business. Now, this whole thing was rigging rules this way and that way to favor this business and disfavor that one, and so on. For instance, this is where media cross ownership was born. A highly controversial consequence of that law.
I am being general, so I can stay brief, but all such law is about redistributing wealth. The players who can afford the table stakes hire lobbyists and fight for their share of the distribution. That is what the entire US Congress spends all it's time doing. (Medicare Part D is an outstanding example of industry demanding a redistribution of wealth, and getting it.)
So, it's clear that the law has no theoretical intentions intrinsic to itself. The intention is supplied by the human consciousness and morality of the suitors who come knocking for rules, regulations and ways to beat the competitor. Now, in this chaos, a direction forms. That is, the redistribution of wealth takes on an absolute vector pointing to those who already have the most wealth, and are able to make the highest bids for new rules.
Now then. Why should the ordinary populace – you, me and the 306M other people who aren't hiring lobbyists- sit back and pretend there is some 'theory of law' at work for them? That's downright silly. It runs against their interests to make such a fantasy out of government. But this is what happens. Those interests buying all the rule changes also have enough money to buy hefty public relations campaigns to keep little people thinking they ought to follow some mythical theory of law, while the guys manipulate it right in front of their face.
Inequity of wealth is an outcome of a process well understood by those gaining from it, and absolutely mis-understood (aka as a theory) by those suffering from it. Change is this easy: Wake up from the dream, look hard at reality by examining the evidence, and make all your subsequent behavior match the reality.
Well Austin, I wrote a splendid rebuttal, which went immediately into some holding tank here. Very discouraging.
Hopefully it appears at some point…nothing like losing something "splendid."
Well, it did appear. Thank you moderators. At some point I will learn what words cause the post to go into that hole.
There you go Austin. Splendid!
"Inequity of wealth is an outcome of a process well understood by those gaining from it, and absolutely mis-understood (aka as a theory) by those suffering from it." This is exactly what Bastiat was arguing against…the perversion of the law. I understand that inequality is legislated into today's laws. No argument from me there.
The law must come from some place. That place is from the human mind based on his/her understanding of the world and his/her place in it. The law is the execution of a philosophy, justly or unjustly. Our country is based on a certain political philosophy, of which I will not get into, that requires men and women of certain character to execute it. Some call it fiduciary responsibility. You cannot escape the necessity of philosophy and its connection to the law. The Constitution is not a philosophy or an ideology.
You state "The law does what law makers decide they need it to do." That is why entities like the 10th Amendment Center exist to fight. Law makers, at least with regards to the general government, are not authorized make laws to fit their needs. Our laws are based on a written constitution of limited, enumerated authority. You can go on and on with what is wrong, the question still is what do you suggest as the solution besides "Wake up from the dream, look hard at reality by examining the evidence, and make all your subsequent behavior match the reality"?
We don't want to play by their rules…their rules are null and void. The remedy proposed on this site is the Constitution. Every issue, ever time. No exceptions, no excuses. Usurpation is not legitimized by repetition. No matter how many laws are passed repugnant to the law of the land, they are never valid. Yes, it will be a long, uphill battle to turn back the usurpations, but the alternative isn't very pretty.
The majority of the issues you raise I agree with, at least as I understand your stance on them. There are many things wrong with our political process today that drive inequality.
I have to rebut the idea that "our laws are based on a written Constitution of limited, enumerated authority." That's the dream (fantasy) I ask people to wake up from. I must ask again to review the actual evidence. It exists by the ton. Do you suppose that when the Pharma lobbyist takes the Congressperson out on big night on the town that they sit and discuss the Constitution? Do you suppose when the CEO of Pfizer is giving directions to his $1M a month lobbying firm, that he is discussing the Constitution with them? Do you think that the insurance giants writing the health care law were thinking about the Constitution? Seriously now. These theories you are advancing are meaningless in the daily business of life or government in the USA.
You have to begin by grappling with the animating force of life. And that force is not political theory. No one wakes up in the morning and says, "Today I will follow the Constitution!" Life, and therefore politics, is animated by self interest. And we have created in government the perfect bazaar for buying and selling these interests. That simply is what it actually is.
You say, "their rules are null and void." Really? That's what is called denial. Their rules are working perfectly for them, and although you think they are invalid, they have managed already to capture about 65% of all wealth in the USA using those null and void rules. This isn't a head game of intellectual wits, it is a battle for all the resources that sustain life.
You are discounting my solution of waking up, seeing the reality, and then making your behavior match that reality. But how can anyone reform something, if they can't see and describe what is happening?
Your remedy is the Constitution? The Constitution is the problem, not the solution. It is the soil in which this current system germinated, grew, and blossomed. How can it possible be the solution to reform? Just logically, your argument doesn't work. Again, this is obvious by doing nothing more exotic than examining the evidence. It's all available, what stops people from reviewing it and understanding it?
Here's an analogy. Suppose a detective shows up to a murder scene where Joe has been shot 4 times with a .45 and is lying in the blood. The detective declares, "The solution here is people must follow the gun laws!" He won't be a detective long, will he?
Your desire to wage a long uphill battle against reality is admirable, and I understand good intentions too, but while you are waving your sword in the air, all the nuts are being eaten, and very soon there will be none left. You do see that, right?
Be the detective that realizes a murder is on the loose and must be found, disarmed, and then prevented from committing more murders. In my recommendation, when you wake up – and see that you are actually art a crime scene – you can go hunt down the criminals and stop them from committing more crimes. Begin with corporate personhood, if you need an extremely specific demon to chase down.
Any law is meaningless if it is ignored, by passed, circumvented, usurped, forgotten, etc., by the law maker, law enforcer, or law breaker. That is reality, but that does not mean we need no laws. The law is already there as I have said. You say "stop them from committing more crimes." What crimes? How can you have a crime without a broken law? If the Constitution is the problem, then it and all laws passed in pursuance of it (via usurpation or not) will be useless in "stopping them from committing more crimes." Again, what are the crimes? What law has been broken? Who made the law and under what authority? Where are all the laws coming from? How can someone commit a crime if the law is the problem? What laws do you suggest? How do you suggest they be enforced? Who gets to decide?
"Matching my behavior to reality" means I would steal and defraud others through force so I can get a few of the nuts that you claim are left. That is not a solution.
Lots of words, but still no solution. You just repeat "my solution of waking up, seeing the reality, and then making your behavior match that reality" and "you can go hunt down the criminals and stop them from committing more crimes. Begin with corporate personhood, if you need an extremely specific demon to chase down"…please expound. What does that mean? Specifics please. What are we to do w/the corporate personhood? Lots of great fluff, but no solutions.
"Matching my behavior to reality" means I would steal and defraud others through force so I can get a few of the nuts that you claim are left. That is not a solution.
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I am sorry, I have confused you on that point. "Matching your behavior to reality" doesn't mean copying others in stealing by force, fraud or any related wrong doing. It means – take actions based on the evidence and facts you discover in reality. Adopt reform strategies that will be effective at creating change. Examples: work to remove corporate money from politics; work to stop the granting of human rights to corporations; work to increase the powers of NGOs apart from any government process; stop supporting the the corrupted Democratic and Republican parties; stop supporting and enhancing the establishment media such as TalkRadio, TV news, commercial newspapers; begin assuming that all people really have the same life objectives and that constantly dividing them between erroneous labels like conservative and liberal is counter-productive. Just to name a few.
So, the idea is that when you stay in the dream of political theory, you aren't actually addressing causes of the actual problems. When you wake up and see the real causes – people, events, strategies – that are hurting the population in real ways, your efforts will lead to significant results.
I would never suggest anyone become a thief and a fraudster. Sorry that you were confused by my words on that.
Okay, I understand a little better. However, how does an individual "work to remove corporate money from politics; work to stop the granting of human rights to corporations; work to increase the powers of NGOs apart from any government process; stop supporting the the corrupted Democratic and Republican parties; stop supporting and enhancing the establishment media such as TalkRadio, TV news, commercial newspapers"? We are in agreement on the essence of your statement.
Through the political process, most likely on the local level first, is the only place to begin such a quest. Abandoning the law is not the solution…and I mean true and just law, not the usurpations. Stopping the perversion of the law is the solution. Society, both in small and large segments, must agree on certain moral and ethical principles. There must be a philosophy, both morally and politically, that must be recognized for us to reform.
Again, sites like this are about action, not just regurgitating political theory. Philosophy provides the foundation for action. There must be guiding philosophy on the purpose of the law (i.e. government). What is the purpose of government? In America, it is based on natural rights and the rule of law. It is based on separation of power, both horizontally across the branches of government and vertically between general, state, and local governments. It is based on the government working on behalf of the people in a fiduciary manner. Of course, that is not an all inclusive list.
You obviously believe that corporations are not individuals and do not, therefore, have individual rights that must be protected. However, what rights are to be protected? What are we protecting and for whom? This is a philosophical question. I agree that we have two false choices, and only two, in modern American. We don't have to chose A or B, we can chose none of the above and go with C or D.
Again, there has to be a fundamental philosophy that binds us all…an understanding of how society will work best to ensure we are both free and secure without undue coercion or fraud. This why I continually come back to Bastiat. He was not just a philosopher, he was an economist and politician. He was trying to explain human nature, where our rights come from, why the law exists, and how, in his opinion, how and why the law has been perverted. His conclusions are a fantastic match for the ideals and values most Americans hold dear…even if they are unaware of them. He is not the end all, be all, but he has provided me a foundation from which to make arguments to support changing the status quo.
Is there a common binding philosophy among 307 million Americans? – "Americanism?" Absolutely not. And worse, there never has been such a thing. That seems to be the rub. The basis of your argument hinges on this being either true or just even desirable.
If there is no such common fundamental binding philosophy, you would probably agree that your strategy is going to be ineffective, right? I suggest we look for any evidence of this common philosophy.
Where and how do we look for it? In politics? In economics? In religion? The red state, blue state divide is growing in prominence, not shrinking (we have TV/radio to thank for that). Can we discern what is in common with a Dakota wheat farmer on 10,000 acres, and broomsweep in the Bronx? What exactly is shared by the atheist/rationalist and the southern Baptist? Yes, we went to school and recited the Pledge of Allegiance in unison as the state mandated. That's not cause I hope, for anyone's belief in unity, is it?
Which is the great American value – war or peace? Go on the street and ask and see what happens. Which is the great American value – equity or inequity? There's a timely debate for us to have. There's good reason why people are shouting the distinctions between bailing out Wall Street and bailing out Main Street.
Our "values" are not words in a pledge recited at school, or words inscribed in a marble monument, or even words projected from a 200 year old document. No! Our values can be seen and specifically measured as the fruits of our actions. Here is the great divide between us: Your position is engraved in marble, my position is the fruits of our collective actions. I believe I am using actual, real evidence – of the type that is suitable in a court to prosecute my point. I believe you are using hope from a distant past.
How can we use any evidence aside from the current fruits? I will not enumerate them, but I will argue that looking at them rationally has to lead a reasonable man to the conclusion that if it is true that we all share a common philosophy, it surely is the wrong and evil one. Why would any man want to design this as an outcome?
But I don't believe we share a foul philosophy. We don't share one at all. We do share the common goal of all mankind, which is survival and self interest. When those are cracked open you see some very simple objectives. People want to have reasonable comfort, they want to raise families, they want to live in peace in social units, pursue useful work, worship their gods or not, and they want to build futures for their children. Our 307M people do have that much in common with all humanity.
To project complex theories of law, or politics or economics onto that humanity is an academic exercise. People are operating at this far more fundamental level. When the WS bankers plotted instruments to confound the economic system and pile up huge immoral gain, do you suspect they had conversations about the common American philosophy of justice? Whoa no! Does GE consider this commonly held "Americanism" when it offshores 10,000 more jobs? How then is this Americanism playing any role whatever in the outcome? Who is applying it and how? Where is the evidence of it?
If there is no evidence of this Americanism, why are we building a big strategy of reform around it? Shouldn't we find what is real about the system, and derive first our causes and then our reforms from that fact?