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Economics in The Constitution. Government's view of the economy could be summed up in a few short phrases: If it moves - tax it. If it keeps moving - regulate it. And if it stops moving - subsidize it. Ronald Reagan.
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Economics in The Constitution
Government's view of the economy could be summed up in a few short phrases: If it moves - tax it. If it keeps moving - regulate it. And if it stops moving - subsidize it. Ronald Reagan
“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Thomas Sowell
What We Will Cover: • Definitions of Economic Terms • Principles of Economic Freedom • Government’s Role in the Economy • The Actual Words of the Constitution in Regards to the Economy • Modern Day Intrusion by Government in the Economy • What Can Be Done
What is an Economy? Definition of Economy: The management of the scarce resources of an organized system or group of people in order to maximize benefits
What is an Economy? Definition of Economy: The management of the scarce resources of an organized system or group of people in order to maximize benefits Management – Private vs. Public
What is an Economy? Definition of Economy: The management of the scarceresources of an organized system or group of people in order to maximize benefits Scarce Resources – Labor, Land, Minerals, Capital, Energy Sources, etc.
What is an Economy? Definition of Economy: The management of the scarce resources of an organized system or group of people in order to maximize benefits Organized System – Political, Financial, Social, Commercial, Religious, etc.
What is an Economy? Definition of Economy: The management of the scarce resources of an organized system or group of people in order to maximize benefits Group of People – Family, Community, City, County, State, Federal
What is an Economy? Definition of Economy: The management of the scarce resources of an organized system or group of people in order to maximize benefits Maximize Benefits – to create wealth, prosperity, independence, etc.
What is Wealth? Wealth = Productivity Wealth = Stack of paper currency
What is Wealth? Wealth = Productivity - A nation and its people become wealthy as they fashion the raw materials of the earth into goods and services - Such a nation, and its people, are always strong and independent - Any nation, or its people, that relies on others to produce its goods or services will, as a result, become weak and dependent - A wealthy nation will always have a vibrant middle class, made up mainly of producers
What is Capital? Capital = the means of production, the means to produce wealth - If capital is the means to produce and to create wealth, then all systems are based on “Capital-ism” - The difference between economic systems such as capitalism, socialism, and communism lies in ownership of the capital. - Decisions about what to produce, how much, and at what price are different in each economic system. Capitalism – private individuals Socialism/Communism – the state/government
Principles of Economic Freedom Principle #1 Free Market Forces Control the Economy – the Government Should Not “In political economy, I think Smith’s Wealth of Nations the best book . . .” Thomas Jefferson
Principles of Economic Freedom Principle #1 Free Market Forces Control the Economy – the Government Should Not -Specialization of production -Supply and demand -Price tells the market what to produce and how much -Competition keeps prices low and quality high -Profits and losses motivate economic decisions Adam Smith
Principles of Economic Freedom Principle #1 Free Market Forces Control the Economy – the Government Should Not “Let vigorous methods be adopted; not to limit the prices of articles, for this I believe is inconsistent with the very nature of things, and impracticable in itself, but to . . . promote . . . private economy; encourage manufacturers, etc.” George Washington
Principles of Economic Freedom Principle #2 The Right to Own and Control Property “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. Property must be secured or liberty cannot exist.” John Adams
Principles of Economic Freedom Principle #2 The Right to Own and Control Property “The “labour” of his body and the “work” of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property.” John Locke
Principles of Economic Freedom Principle #3 The Right to Keep the Fruit of One’s Labors “The utopian schemes of leveling [redistribution of wealth], and a community of goods [government ownership of the means of production], are as visionary and impracticable as those which vest all property in the Crown. [These ideas] are arbitrary, despotic, and, in our government, unconstitutional.” Samuel Adams
“No man would become a member of a community in which he could not enjoy the fruits of his honest labor and industry. The preservation of property, then, is a primary object of the social compact . . . It [divesting a citizen of his property] is inconsistent with the principles of reason, justice, and moral rectitude; . . . and lastly, it is contrary to the letter and the spirit of the Constitution. Vanhorne's Lessee v. Dorrance, 1795
Principles of Economic Freedom Principle #3 The Right to Keep the Fruit of One’s Labors To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson
Principles of Economic Freedom Principle #4 Personal Responsibility – Don’t Allow Others to Do for Someone What He Can Do for Himself I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it . . . I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. Benjamin Franklin
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." James Madison “I cannot find any authority in the Constitution for public charity. [It] would be contrary to the letter and the spirit of the Constitution and subversive to the whole theory upon which the Union of these States is founded.” President Franklin Pierce, 1854
The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune . . . Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of the kindly sentiment and conduct which strengthens the bonds of a common brotherhood.” Grover Cleveland, 1887
Principles of Economic Freedom Principle #5 Government Involvement in the Economy Should be Non-Intrusive, Impartial, Predictable, and in Accordance with Natural Law “Life . . . liberty, property – this is man. And in spite of the cunning of artful political leaders, these three gifts from God precede all human legislation, and are superior to it.” Frederic Bastiat
Principles of Economic Freedom Principle #5 Government Involvement in the Economy Should be Non-Intrusive, Impartial, Predictable, and in Accordance with Natural Law But how is this legal plunder to be identified? Quite simply. See if [government] takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if [government] benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Frederic Bastiat
Principles of Economic Freedom Principle #6 Don’t Spend More Than You Earn "Spend less than you earn - happy. Spend more than you earn - unhappy." Benjamin Franklin
Principles of Economic Freedom Principle #6 Don’t Spend More Than You Earn "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world." Thomas Jefferson
Is There a Proper Role for Government in the Economy? [P]ersons and property are the two great subjects on which Governments are to act; . . .the rights of persons and the rights of property are the objects for the protection of which Government was instituted. James Madison “That to secure these rights, Governments are instituted among Men” Declaration of Independence
The Constitution Requires Government to Enact and Enforce Laws that: Protect free market forces as the means for controlling our economy Protect the right of man to own and control property Protect the right of man to keep the fruit of his labors Protect the natural law of personal responsibility Protect man from intrusive, partial, unpredictable governmental involvement Protect man from the enslavement of unpaid public debt
10 Planks of the Communist Manifesto • Abolition of private property; all land for public purposes. • A heavy progressive or graduated income tax. • Abolition of all rights of inheritance. • Confiscation of the property of all emigrants and rebels. • Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly. • Centralization of the means of communication and transport. • Factories & instruments of production owned by the State. • State controlled industrial & agricultural armies. • Combination of agriculture with manufacturing industries. • Free education for all children in public schools.
“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government - lest it come to dominate our lives and interests.” Patrick Henry
Federal Land Powers Clause Article I, Section 8, Clause 17 “Congress shall have power to exercise . . . Authority over all places purchased by the consent of the Legislature of the State . . . For the erection of forts, magazines, arsenals, dockyards, and other needful buildings
Federal Land Powers Clause Article I, Section 8, Clause 17 “Congress shall have power to exercise . . . Authority over all places purchased by the consent of the Legislature of the State . . . For the erection of forts, magazines, arsenals, dockyards, and other needful buildings
Federal Land Powers Clause Article I, Section 8, Clause 17 “Congress shall have power to exercise . . . Authority over all places purchased by the consent of the Legislature of the State . . . For the erection of forts, magazines, arsenals, dockyards, and other needful buildings
Federal Land Powers Clause Article I, Section 8, Clause 17 “Congress shall have power to exercise . . . Authority over all places purchased by the consent of the Legislature of the State . . . For the erection of forts, magazines, arsenals, dockyards, and other needful buildings
Federal Land Powers Clause Article I, Section 8, Clause 17 “Congress shall have power to exercise . . . Authority over all places purchased by the consent of the Legislature of the State . . . For the erection of forts, magazines, arsenals, dockyards, and other needful buildings • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
The Due Process Clause Amendments V and XIV "No person shall be . . . deprived of life, liberty, or property, without due process of law” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Eminent Domain Clause Amendment V “Nor shall private property be taken for public use, without just compensation." • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Equal Protection Clause Amendment XIV “Nor shall any state deny to any person within its jurisdiction the equal protection of the laws.” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Equal Protection Clause Amendment XIV “Nor shall any state deny to any person within its jurisdiction the equal protection of the laws.” Equal rights – not equal things
Contracts Clause Article 1, Section 10, Clause 1 “No state shall pass any . . . ex post facto Law, or Law impairing the Obligation of Contracts”
Contracts Clause Article 1, Section 10, Clause 1 “No state shall pass any . . . ex post facto Law, or Law impairing the Obligation of Contracts”
Contracts Clause Article 1, Section 10, Clause 1 “No state shall pass any . . . ex post facto Law, or Law impairing the Obligation of Contracts” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Bankruptcy Clause Article 1, Section 8, Clause 4 “To establish uniform laws on the subject of Bankruptcies throughout the United States.” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Bankruptcy Clause Article 1, Section 8, Clause 4 “To establish uniform laws on the subject of Bankruptcies throughout the United States.” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Bankruptcy Clause “The power of establishing uniform laws of bankruptcy . . . will prevent so many frauds where the parties or their property may lie or be removed into different States” James Madison, Federalist #42
Bankruptcy “Bankruptcy should no longer be thought of as a last resort. In fact, the sooner bankruptcy is considered a viable option, the sooner the debtor can regain his or her dignity and become a more productive member of society, helping the economy recover. There is no question that bankruptcy should be considered patriotic.”
Interstate Commerce Clause Article 1, Section 8, Clause 3 “The Congress shall have Power to … regulate Commerce with foreign Nations, and among the several States . . .” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn
Interstate Commerce Clause Article 1, Section 8, Clause 3 “The Congress shall have Power to … regulate Commerce with foreign Nations, and among the several States . . .” • Free Market • Own & Control Property • Keep Fruit of Labor • Personal Responsibility • Limited Government • Can’t Spend More than You Earn