19 September 2008

Your friendly, authoritarian bailouts

My thanks to Instapundit for pointing out this post by Todd Zywicki at The Volokh Conspiracy on the irrelevance of Congress in the recent bailouts being done by the SEC and Federal Reserve. Both of these institutions were created as 'Progressive' ones by Presidents getting them from Congressional legislation. The Executive, by having both of these organs of government under the control of the Executive can then act to intervene in the US economy at will. On any thing the resident of that Office wants. This did not come about over night, and I first looked at some of the changes in power structure of the US government in The 10 years that changed the path of America (and here, also). Before delving into the past, let me see if I can extract the basic thesis of Mr. Zywicki from his post (bolding mine):

Congressional Irrelevance:

One interesting aspect of the recent government bailouts has been the complete irrelevance of Congress. The operation and decision-making seems to be run almost entirely by the Secretary of Treasury and Federal Reserve. Congress appears to lack the ability, the will, and the decisiveness to play any role except spectator, as a handful of senior executive branch officials have nationalized major portions of Wall Street.

What is further interesting is that Congress is not missed in the slightest. No one is clamoring for a greater role for our elected representatives in dealing with these problems. I haven't heard anyone saying, "We really need to get Congress more involved in this. They'll know what to do."


Put more generally, Congress's ridiculousness has increasingly caused it to forfeit its status a co-equal branch of government. 40 or 50 years ago it might have been plausible to imagine Congress addressing important public policy issues like entitlement reform or health care reform (I'm not saying they would have done it, but it seems like it was more plausible then). Serious people were in the Senate then--Taft, Johnson, etc. Today, however, the idea that serious solutions to pressing social problems might originate in Congress is hard to suggest with a straight face.

The shift of the stance of the federal government to be 'interventionist' and 'activist' in the economy and lives of the people of the US can be traced back to Jefferson who put himself up as 'for the common man' but lived on an estate. Mind you he did live in a rural area which makes his claim to being close to the common man far more plausible than those of latter day 'populists' or 'liberals' coming from large urban enclaves. However, the era of when the Executive changed from its traditional role of limited powers to those of expansive ones comes from President Theodore Roosevelt. He did not start the great legislative process that would create these huge and interventionist institutions in the federal government, indeed he spoke out *against* them in his autobiography. We can, however, see how this started... and for those wanting to point at President Lincoln, the case could be made that an internal Civil War gave large powers to the federal government as given in the Constitution. That argument can be made that he was the first 'interventionist' President, but he had a Civil War to deal with and CinC at home during such times has a full suite of powers by the Law of Nations that is normally not operative due to geographic location of the actual fighting. As the Presidency embodies those powers as given in the Constitution, when operative at war, at home during a Civil War or Insurrection, the President gets powers to act that are a confluence of those things. The first President to do *that* was the First President George Washington and the Whisky Rebellion, so President Lincoln had precedent for exercising martial controls inside the US during an insurrection and definitely in a Civil War.

Back to President Theodore Roosevelt and his views on the Presidency. For that I will look to his autobiography (at Project Gutenberg) and Chapter X gives his account of his view of the Nation and how it runs and some conservatives may get a cold sweat when reading this:

For the reasons I have already given in my chapter on the Governorship of New York, the Republican party, which in the days of Abraham Lincoln was founded as the radical progressive party of the Nation, had been obliged during the last decade of the nineteenth century to uphold the interests of popular government against a foolish and illjudged mock-radicalism. It remained the Nationalist as against the particularist or State's rights party, and in so far it remained absolutely sound; for little permanent good can be done by any party which worships the State's rights fetish or which fails to regard the State, like the county or the municipality, as merely a convenient unit for local self-government, while in all National matters, of importance to the whole people, the Nation is to be supreme over State, county, and town alike. But the State's rights fetish, although still effectively used at certain times by both courts and Congress to block needed National legislation directed against the huge corporations or in the interests of workingmen, was not a prime issue at the time of which I speak.

First off, Theodore Roosevelt breaks with the founding in putting forth the exact idea that was warned about by the 'Anti-Federalists' back in 1787-88: that the States would be denigrated or dissolved in favor of National government. Theodore Roosevelt agrees that the Nation must do this and that those holding the idea that the States can hold the Federal Government to account have a 'fetish' that is unsound. That flies in the face of what democracy was seen to be at the Founding: diverse, complex and local. I've looked at many of those views in previous articles (here, here, here, here, here, here) and would have to say that this is not a 'fetish', but the view that the powers of the States to appoint Senators and recall their Congressmen is a form of veto power over the federal government that is generally inactive in modern times. Indeed it was the States not sending Senators to Washington, DC that gave the Progressivists a stand to shift that power of selection directly to the population and, thus, leave the negative power of recall as the only one remaining to the States. The Progressivists would then argue for individual taxation of unequal basis and require an amendment to do that, against all warnings of *both* 'Federalists' and 'Anti-Federalists' at the founding who pointed to that as an illiberal mode of taxation. Prior to that the federal government took its financial burden, divided it up equally amongst all citizens and then handed that out based on population for the States to collect. Thus unequal apportionment was done at a local, not national level as that was seen as the best way to deal with the common debt necessary to run national government. Those two structural changes would come into being during the Progressivist era and Theodore Roosevelt was at the heart of that re-definition of the federal system.

Second off, Theodore Roosevelt would use the war time powers President Lincoln utilized as the Head of State, Commander in Chief and Head of Government as something to be emulated at ALL TIMES:

This had, regrettably but perhaps inevitably, tended to throw the party into the hands not merely of the conservatives but of the reactionaries; of men who, sometimes for personal and improper reasons, but more often with entire sincerity and uprightness of purpose, distrusted anything that was progressive and dreaded radicalism. These men still from force of habit applauded what Lincoln had done in the way of radical dealing with the abuses of his day; but they did not apply the spirit in which Lincoln worked to the abuses of their own day. Both houses of Congress were controlled by these men.


I made a resolute effort to get on with all three and with their followers, and I have no question that they made an equally resolute effort to get on with me. We succeeded in working together, although with increasing friction, for some years, I pushing forward and they hanging back. Gradually, however, I was forced to abandon the effort to persuade them to come my way, and then I achieved results only by appealing over the heads of the Senate and House leaders to the people, who were the masters of both of us. I continued in this way to get results until almost the close of my term; and the Republican party became once more the progressive and indeed the fairly radical progressive party of the Nation. When my successor was chosen, however, the leaders of the House and Senate, or most of them, felt that it was safe to come to a break with me, and the last or short session of Congress, held between the election of my successor and his inauguration four months later, saw a series of contests between the majorities in the two houses of Congress and the President,—myself,—quite as bitter as if they and I had belonged to opposite political parties. However, I held my own. I was not able to push through the legislation I desired during these four months, but I was able to prevent them doing anything I did not desire, or undoing anything that I had already succeeded in getting done.

Radical Progressivist Republican Party.

Makes your head swim, doesn't it?

This was utilizing the Progressivist ideal that had grown up to counter that temporary war-time powers should really be given to government at all possible times to counter all possible threats and to run a Nation. That is an illiberal concept, hearkening back to French Revolution and, before that, to Chinese Empires that may had a willing and servile bureaucracy that would enact the power of the Emperor completely and without question. That was absolute dictatorial power of a totalitarian State and, of course, it ran into obstacles with a federal republic that was set up to be none of those things although had the cracks in it as pointed out from 1787-88 to allow all of them, when corrupt individuals got into power.

What is interesting is that Theodore Roosevelt would point out some of the problems to this line of thought later in the autobiography, and I give him extremely high credit for telling us how he thought and why he came to the ideas he did. Rarely has such insight been put into a political autobiography. Thus when he gives us this passage, again from the same chapter, we find a startling admission of his pointed view of how he was changing things:

The most important factor in getting the right spirit in my Administration, next to the insistence upon courage, honesty, and a genuine democracy of desire to serve the plain people, was my insistence upon the theory that the executive power was limited only by specific restrictions and prohibitions appearing in the Constitution or imposed by the Congress under its Constitutional powers. My view was that every executive officer, and above all every executive officer in high position, was a steward of the people bound actively and affirmatively to do all he could for the people, and not to content himself with the negative merit of keeping his talents undamaged in a napkin. I declined to adopt the view that what was imperatively necessary for the Nation could not be done by the President unless he could find some specific authorization to do it. My belief was that it was not only his right but his duty to do anything that the needs of the Nation demanded unless such action was forbidden by the Constitution or by the laws. Under this interpretation of executive power I did and caused to be done many things not previously done by the President and the heads of the departments. I did not usurp power, but I did greatly broaden the use of executive power. In other words, I acted for the public welfare, I acted for the common well-being of all our people, whenever and in whatever manner was necessary, unless prevented by direct constitutional or legislative prohibition. I did not care a rap for the mere form and show of power; I cared immensely for the use that could be made of the substance. The Senate at one time objected to my communicating with them in printing, preferring the expensive, foolish, and laborious practice of writing out the messages by hand. It was not possible to return to the outworn archaism of hand writing; but we endeavored to have the printing made as pretty as possible. Whether I communicated with the Congress in writing or by word of mouth, and whether the writing was by a machine, or a pen, were equally, and absolutely, unimportant matters. The importance lay in what I said and in the heed paid to what I said. So as to my meeting and consulting Senators, Congressmen, politicians, financiers, and labor men. I consulted all who wished to see me; and if I wished to see any one, I sent for him; and where the consultation took place was a matter of supreme unimportance. I consulted every man with the sincere hope that I could profit by and follow his advice; I consulted every member of Congress who wished to be consulted, hoping to be able to come to an agreement of action with him; and I always finally acted as my conscience and common sense bade me act.

Point three, and the hard one for people to accept, is that Theodore Roosevelt rejected the restrictive language of the Bill of Rights in Amendments IX and X:

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Notice there is no 'higher duty' clause in the Constitution, although its formulation does follow the lines laid out for powers as seen in The Law of Nations, and the founders put a hard and fast restriction on 'broadening' powers with these two Amendments. It is the negative power construction of the document, itself, in regards to the federal government - if it is not given directly, by statement to the government, then the government doesn't get it. Some of the powers are, indeed, broad powers, but there is no way to 'broaden' them into other areas nor take the positivist approach given by Theodore Roosevelt.

While I have high esteem for Theodore Roosevelt as both President and Citizen, it is this Progressivist attitude that gives the strong footing to the 'living constitution' concept. It is not President Washington, Jefferson or Lincoln that takes this attitude, but it is that of President Theodore Roosevelt. While Roosevelt would be out of office, the Progressivists would continue to push through this approach to government, building on such things as the Shanghai Treaty for the first national laws to restrict medications. And then also use that Progressive stance to get Amendments passed to alter the federal system in a sharp direction that was contrary to the founding and only the LAST is the expansion of liberty by extending the franchise right to women.


Passed by Congress July 2, 1909. Ratified February 3, 1913.

Note: Article I, section 9, of the Constitution was modified by amendment 16.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.


Passed by Congress May 13, 1912. Ratified April 8, 1913.

Note: Article I, section 3, of the Constitution was modified by the 17th amendment.

The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.

When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.

This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.


Passed by Congress December 18, 1917. Ratified January 16, 1919. Repealed by amendment 21.

Section 1.
After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2.
The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3.
This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.


Passed by Congress June 4, 1919. Ratified August 18, 1920.

The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.

Congress shall have power to enforce this article by appropriate legislation.

Considering the Shanghai Treaty and Harrison Stamp Act as the start of the Progressive era of change, the federal government's structure and power basis alters greatly in many areas. Moving away from the 'stewardship role' in which the food and drug purity acts were *already* lowering the use of addictive medications, the government would start on a long term quest for power in its ability to rule the lives of its citizens. These areas include: medication, taxation, use of alcohol, removing the State as the local guardian of liberty and freedom, and the regulatory powers that go with each of these things. The problem with the vision of Theodore Roosevelt on the Presidency is that when taken up by those who do not see themselves as supporters of democracy and liberty, they go to ill ends. Note that almost all of these were done under the term of President Woodrow Wilson, a Progressivist and rival to Theodore Roosevelt who did not have any of his inclinations on the use of power. If Theodore Roosevelt saw the worship of States rights as a 'fetish' and stumbling block, Woodrow Wilson would batter it into near oblivion at the federal level and have the federal government take up much of the powers that had only been the realm of the States.

That sets the stage for President Wilson to create the Federal Reserve system, which would be the first of its kind since the old National Bank was disestablished.... you did know that we once had a National Bank and that it was liquidated, right? No?

Well that story goes back to Hamilton and Jefferson who each would work towards a more structured banking system for the nation. It was President Jefferson that lobbied hard to get a National Bank created and give some ability of the federal government to have input into the economy of the US. Great, huh? Of course that Bank was soon in debt to overseas aristocrats, nobles and folks with just plain lots of money at home, and for that investment the interest payments went directly from the coffers of the Bank and into foreign hands and the rich. Plus a number of those folks got a vote in the Bank, including the ones who were foreigners: mind you the bank was a monopoly set up by Congress. The idea of having a large swath of the American economy controlled by outside interests was not one that set will with many people. And having so much foreign money and power so close to the federal government made more than a few folks wonder if monetary policy was being inordinately influenced by those outside the US. When the Bank came up for renewal, it was vetoed by the President. That was President Andrew Jackson on one of the most historic veto messages ever given from the Presidency. Parts of it have worked its way into the public conscience to the point that some who deride President Jackson actually state his beliefs and ideals and don't recognize it. It is fully given at The Avalon Project, and the Bank Veto Message of 10 JUL 1832, while lengthy, has so many fundamental ideas of governance and the economy in it, that it is a hard thing to read through as you move from one salient passage to the next.

Early on he looks towards expansive ownership in the Bank:

It is not conceivable how the present stockholders can have any claim to the special favor of the Government. The present corporation has enjoyed its monopoly during the period stipulated in the original contract. If we must have such a corporation, why should not the Government sell out the whole stock and thus secure to the people the full market value of the privileges granted? Why should not Congress create and sell twenty-eight millions of stock, incorporating the purchasers with all the powers and privileges secured in this act and putting the premium upon the sales into the Treasury?

But this act does not permit competition in the purchase of this monopoly. It seems to be predicated on the erroneous idea that the present stockholders have a prescriptive right not only to the favor but to the bounty of Government. It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people from competition in the purchase of this monopoly and dispose of it for many millions less than it is worth. This seems the less excusable because some of our citizens not now stockholders petitioned that the door of competition might be opened, and offered to take a charter on terms much more favorable to the Government and country.

We would call this 'privatization'. We would call it 'selling off government assets to benefit the people'. And under that concept a National Bank would only serve under the aegis of government allowed monopoly for distribution of currency held by private citizens who would be the ones to guide that structure. That would be a radical concept if applied *today* to the Federal Reserve: liquidate the control structure in government and allow the people of the US to run it under government auspices for the people. Unfortunately Congress, then, didn't want to do that.

The fourth section provides " that the notes or bills of the said corporation, although the same be, on the faces thereof, respectively made payable at one place only, shall nevertheless be received by the said corporation at the bank or at any of the offices of discount and deposit thereof if tendered in liquidation or payment of any balance or balances due to said corporation or to such office of discount and deposit from any other incorporated bank." This provision secures to the State banks a legal privilege in the Bank of the United States which is withheld from all private citizens. If a State bank in Philadelphia owe the Bank of the United States and have notes issued by the St. Louis branch, it can pay the debt with those notes, but if a merchant, mechanic, or other private citizen be in like circumstances he can not by law pay his debt with those notes, but must sell them at a discount or send them to St. Louis to be cashed. This boon conceded to the State banks, though not unjust in itself, is most odious because it does not measure out equal justice to the high and the low, the rich and the poor. To the extent of its practical effect it is a bond of union among the banking establishments of the nation, erecting them into an interest separate from that of the people, and its necessary tendency is to unite the Bank of the United States and the State banks in any measure which may be thought conducive to their common interest.

Yes he is against a full bank monopoly, way back in 1832. Amazing, no? He has this strange belief that if it is US legal tender it should have the same value in all places and by allowing banks to do that with each other and *not* provide that to the citizenry, the banks gain in wealth by the discount rate of that currency due to distance. That is some of the damned most sophisticated economic analysis I have heard from ANY President. Hell, I can't find economists who could state that as well today. This next part is most telling and so often glossed over by those folks pushing for a fully integrated global economy after seeing a minimum of 1/3 of its controlling body being foreign owned.

Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.

Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy.

If we must have a bank with private stockholders, every consideration of sound policy and every impulse of American feeling admonishes that it should be purely American. Its stockholders should be composed exclusively of our own citizens, who at least ought to be friendly to our Government and willing to support it in times of difficulty and danger. So abundant is domestic capital that competition in subscribing for the stock of local banks has recently led almost to riots. To a bank exclusively of American stockholders, possessing the powers and privileges granted by this act, subscriptions for $200,000,000 could be readily obtained. Instead of sending abroad the stock of the bank in which the Government must deposit its funds and on which it must rely to sustain its credit in times of emergency, it would rather seem to be expedient to prohibit its sale to aliens under penalty of absolute forfeiture.

War, economy, and public right to control their own future and their own fortune - those are truly radical themes that many would call 'isolationist'. Now, in the case of Fannie Mae and Freddie Mac, why is it that the bailout would help Russia and China? Have they no interest in causing turmoil in our domestic economy? For those lauding the Fed and the involvement of the federal government, do realize that the economy that President Jackson would put in place by this Veto would change the course of the Nation from agriculture to manufacturing, would spur external trade and internal growth, and would create a diverse economic environment for good and ill. If you decry the ills, then also acknowledge the robust growth and infrastructure advances that happened with such a woebegone and inadequate system in place. It was light years ahead of what we can do with nearly a century of government mismanagement in place. Also note that if you hold that Americans were drunk, addicted, etc. during that era, that they also appear to have achieved truly phenomenal things while having those problems as it was a 'no excuses nation' at that point in time. Enough so that after WWI the US would be a major nation on the world stage having the only fully equipped million man army *left* after that conflict.

The Government of the United States have no constitutional power to purchase lands within the States except "for the erection of forts, magazines, arsenals, dockyards, and other needful buildings," and even for these objects only "by the consent of the legislature of the State in which the same shall be." By making themselves stockholders in the bank and granting to the corporation the power to purchase lands for other purposes they assume a power not granted in the Constitution and grant to others what they do not themselves possess. It is not necessary to the receiving, safe-keeping, or transmission of the funds of the Government that the bank should possess this power, and it is not proper that Congress should thus enlarge the powers delegated to them in the Constitution.

Yeah, no earmarks for bridges, canals, water works, fountains, statuary, lawns, gardens... that is why the Defense appropriations bill gets so much pork fat, as it is Constitutional for those forts, magazines, etc. Somehow I doubt multi-billion dollar biathlon courses were expected. Or municipal bike paths. Somehow President Jackson doesn't see this 'broad view' concept of the Presidency or of federal government as a whole. And yet he is doing something extremely impressive within the confines of those powers. From there he goes into tax policy, SCOTUS decisions, what is and is not proper within the confines of the Constitution, the law, the power of the States, and speaks about them in a coherent way. When he comes to the role of the Executive it is telling, and a stark contrast to Theodore Roosevelt's:

If our power over means is so absolute that the Supreme Court will not call in question the constitutionality of an act of Congress the subject of which "is not prohibited, and is really calculated to effect any of the objects intrusted to the Government," although, as in the case before me, it takes away powers expressly granted to Congress and rights scrupulously reserved to the States, it becomes us to proceed in our legislation with the utmost caution. Though not directly, our own powers and the rights of the States may be indirectly legislated away in the use of means to execute substantive powers. We may not enact that Congress shall not have the power of exclusive legislation over the District of Columbia, but we may pledge the faith of the United States that as a means of executing other powers it shall not be exercised for twenty years or forever. We may not pass an act prohibiting the States to tax the banking business carried on within their limits, but we may, as a means of executing our powers over other objects, place that business in the hands of our agents and then declare it exempt from State taxation in their hands. Thus may our own powers and the rights of the States, which we can not directly curtail or invade, be frittered away and extinguished in the use of means employed by us to execute other powers. That a bank of the United States, competent to all the duties which may be required by the Government, might be so organized as not to infringe on our own delegated powers or the reserved rights of the States I do not entertain a doubt. Had the Executive been called upon to furnish the project of such an institution, the duty would have been cheerfully performed. In the absence of such a call it was obviously proper that he should confine himself to pointing out those prominent features in the act presented which in his opinion make it incompatible with the Constitution and sound policy. A general discussion will now take place, eliciting new light and settling important principles; and a new Congress, elected in the midst of such discussion, and furnishing an equal representation of the people according to the last census, will bear to the Capitol the verdict of public opinion, and, I doubt not, bring this important question to a satisfactory result.

Here is a careful, step-by-step analysis of SCOTUS decisions and then how the use of one power to diminish other powers indirectly can contravene the outlay of powers given in the Constitution. That is far more sophisticated an analysis than of any other piece of legislation I have read about recently, as it cuts to the heart of the role of Congress and the Executive in performing their duties and not infringing upon the rights of the States and the people. That is the 'fetish' that Theodore Roosevelt talks about - States Rights. Here President Jackson clearly identifies that it is possible for Congress to meet each and every single objection that he has raised before the bill was even finalized... yes, these complaints are, many of them, more than a year old... he would be more than happy as an Executive to enact such legislation for the government. Without such legislation with such provisions he *must* veto the legislation as against the duties set to the federal government. His job is not to run the economy, set fiscal policy or do any such thing, but to enact and administer the laws of Congress that do not infringe upon the rights of the States or the people. If you could thread all the needles, consider all the negatives and remove them, and then have a fully compatible bill with the Constitution that would do such a thing, then he would, indeed, have happily enacted it. Notice who has to do the heavy lifting to make sure it that the objections are met? Congress.

Does a President need an expanded view to do that? No.

Now for the famous passage, that everyone seems to have heard but no one knows where it comes from.

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Actually there are a few passages that we are attuned to in that. Amazing that many, today, consider President Jackson to be unsophisticated.

The man was a POW and our first President to have been a POW in a prior war. It was the Revolutionary War. He was 13 when captured. He would then become a General and in the War of 1812 defeat the British at New Orleans. In quelling foreign inspired Native American attacks he would 'take Florida' to the point where Spain would sell it to us. He did not have computers, the Internet, or a huge staff of advisors and followers through the years, but seems to have been one of the most politically astute and economically wise Presidents we have ever had. I am hard pressed to think of any President who had such in-depth understanding of the Constitution, laws, economy and foreign influence on the continent. He would also recognize a slew of other Nations, open up trade relations far and wide, and send the first US ship around the planet in pursuit of punishing pirates. Oh, he would also threaten his home State of North Carolina with the militia if it thought it could get away without paying its share of the taxes... nearly got the civil war a few decades early. Over taxes.

In many personal ways there are similarities between Jackson and Roosevelt, but their philosophy of government is at 180 degrees.

That Bank Veto stood until President Wilson decided that the federal government really did need to 'manage the economy'. That was more on the lines of 'making it up as you go along' about all the good things that government should do. The Fed would go through some morphing over the years, with Congress tinkering time and again with it, but that didn't stop the Great Depression, various recessions and 'stagflation', or other market crises that are part of the normal business cycle. The SEC, coming in under the later Progressive FDR would be put in place starting small, but would grow over the years, as government is wont to do when it finds that no one is stopping their power grabs. Neither did a damned thing to point out the problems of Fannie and Freddie, the first one another of those lovely ideas to waste money during the Depression when the country really needed liquid capital to get things moving again.

Say, just why is it we are told all these great things 'helped get us out of the Depression' when the Depression was substantially over by 1937 and most of these things hadn't even been stood up yet? That is what all the economic analysis shows: GDP not only having recovered but added on the expected amount after the 1928 drop-off... you did know the 'market crash' started in 1928, right? By 1933-34 the economy had hit rock bottom and was on a sharp and steep upwards slope to recovery. Luckily I covered that in a previous post, so I don't have to go through it all again here.

The Progressives in politics worked very hard to concentrate power into the federal government as that was seen as a 'modern' or 'advanced' way to do things. They had an influence of foreign groups looking at how this was being done and they expanded upon it in Italy, Germany, UK, France, and the Soviet Union. That would end up being varieties of Socialism: Communist, Fascist, National Socialist. If you want the future of US government expanding to 'regulate' more of the economy, you can get a feel for it by looking at the historical predecessors who did this. Note: they all failed, and badly. That is not, of necessity, predictive as history is not inevitable in this realm due to the lack of vibrant but non martial expansive authoritarian regimes. And an undermined representative democracy in the US may just be the first such regime to be both authoritarian and relatively stable. Something that Mark Steyn indicates as being called Incumbistan, which sums up a form of aristocracy that is perennially elected, has little change-over and becomes very unrepresentative of the population as it disenchants that population from voting.

That brings us to today and the movement as Mr. Zywicki points out, of the ability of the President and the Executive branch of government to operate autonomously in an area not given to it in the Constitution. Nor was it given to Congress which gets only to set some laws on coinage and currency, to go with its interstate commerce regulation power. It is that latter which has been abused beyond any original scope of the Constitution, even as the SCOTUS validates such moves via its strange concept of 'national market being influenced by local activities in the States'. That is one of the final blows to States Rights, and the concept that this is a federal system, as it destroys any final place where the federal government may *not* interfere. Change is not progress, especially when it endangers the ability of a federal system to BE a federal system with checks upon the national government not only by limited Constitutional language but by counter-balance from the States and the people. Today the Executive branch is operating autonomously (as Michelle Malkin is blogging on) to the tune of almost $1 trillion of public backing without any legislation to authorize it. That is the Congressional power, not the executive, and not one penny of the federal government's funds can be committed without an act of Congress to back it. It is the power of autonomous institutions to act against the public interest at the behest of the Executive that has these powers divided, as the concentration of such power without check and balance creates the ability for government to act without democratic oversight... that is small 'd' democratic, as in democracy and input from the common man via our elected representatives in Washington, DC.

To give a scale of that, it is the amount of financial shock sent into the real estate and global insurance market by the falling of the Twin Towers on 9/11. Those ripples went global in scope, and yet the economy weathered it out just fine, even eking out a small GDP gain in 2001 *with* the loss of 9/11 and the insurance liability that had to be absorbed into the private market. This has been caused by the confluence of events that starts in the time of Theodore Roosevelt and going beyond the President being a 'mere steward' of the Nation. By injecting an activist Presidency and then with Progressives shifting the balance of Constitutional checks via their removal, and with the action of Congress in that exact, same timeframe to limit its size, the idea of a growing democracy has been given a harsh blow. Bailouts of private lending institutions or private insurance groups are a failing of democratic system based on limited federal government and representative democracy to back a republican system. Representative democracy as seen at the founding, meant a diverse representation, with a number of State legislative bodies having *more* representatives than the federal system had. By giving Congress the power to set its own size without having any check on it, say by popular referendum, Congress has so limited the ability to be representative that the most numerous branch of government, that of the House of Representatives, has one Representative per every 550,000 people. Considering that the Constitution sets a maximum size limit at 1 per 30,000, we can get an idea of what was considered 'representative democracy' and if we have held close to that ideal over time. This distance between the people and their representatives is corrosive to the very concept of representative democracy and gives a ready pathway to authoritarian government that can act as it pleases for its own concerns without regards to the people.

Why is this important? Well consider where the Rasmussen Reports places the public favorability to a public bailout for financial firms: 7%.

That is hitting in the range of those who are favorably inclined towards Congress, these days.

Who is this set of bailouts going to help? Beyond Russia and China? In theory it helps the US market, but to get that positive you do have to start removing the ability of businesses TO fail in a capitalist system. And when public largesse is given to back such firms, just where is the accountability when done by an institution with no public backing?

There isn't any.

That said there is a way to work this so that accountability gets ploughed back into the system with a pointy stick, but you will not hear this from either of the two parties or any member of Incumbistan. That way takes a leaf from President Jackson, not from President T. Roosevelt, and the logic is one that works quite well as Jackson enunciated it.

Give each and every taxpaying American a share in the stakes directly, without the government holding ANY OF IT. If they are going to use our money, then give the people the piece of the action that will then require these awful institutions to directly repay the people, without any damned stinking intermediaries to screw around with it in the public coffers. Sure these organizations could default on that debt obligation, and get tied up for a few years with the federal government. What happens when they try to walk out on tens of millions of taxpayers who want a piece of their hide? Well the largest class action lawsuit the world has ever seen, not only against those institutions but against our intermediaries to show cause as to WHY the hell the American people's representatives who have something close to authority in this area were NOT consulted. Yeah, no one expects Congress to offer solutions: the bastards sit around on their butts unless they arise to pontificate on some issue.

Or pass gas.

Its about the same.

Because our government is representing you, me and every other American citizen and putting our tax dollars at risk in these institutions with no oversight worth talking about. Who walks out on debts to the federal government? Who doesn't these days, beyond law abiding citizens? We the harassed taxpayers of the United States. We are still paying off the S&L debacle and now we get this?

I'm surprised its at 7%, but then there is the margin for error which starts to let you get an idea of how low that can go.

The two Presidential campaigns are, almost in unison, acting in the interests of Incumbistan, to protect their interests and saying that its all about protecting you and me. They want to plough money into institutions that can't tell their butt from a hole in the ground, mostly because they paid off Congress to change the definitions. And that is both parties without any exception, as this covers two Presidents and something like 4 to 6 Congresses. The same Congresses that swore, up and down in 1986 that they would, Real Soon Now, fix the immigration problem after the Amnesty.

That was a lie.

The same Congresses that promised lovely oversight on the institutions in question.

That was a lie.

The same Congresses that were told about the economic warfare being waged on our domestic oil industry via foreign economic manipulation to damage our petroleum production, and Congress promised they would look into. Or try to understand it.

That was a lie.

Now we are told that this will bring all sorts of lovely oversight, regulation and all sorts of other fairy dust that was supposed to prevent Enron and Worldcom and the S&L crisis and...

Those are lies.

What is an authoritarian regime?

One that doesn't change much, vests its interests with power, backs its interests and then tries to mollify the population while it does those things.

Welcome to the era of authoritarianism in the US.

You, the taxpayer, get the bill for our aristocracy.

Because they don't give a good, hot damn about you.

Just their political hides and paying off their cronies.

But they won't tell you that, and say otherwise no matter what the party is they belong to.

And that, too, is a lie.


Yeah, I don't like what it has reformed into and don't like where the next bit of 'reform' will take it. Because we have seen where the lies of the past have gotten us. I don't trust our elected representatives in this, and would enjoy seeing my pound of flesh show up to be paid off by these institutions. And keep it out of the hands of the government that no longer requires us to operate, save for some nice shows of affection a few months before the election. And then work very hard to turn me off to representative democracy between elections.

So how about some of that luvin now, huh? A piece of the action for the American people? Isn't that what democracy is all about?

No comments: