America, at its founding, was predicated on certain first principles, those basic, rock-hard truths for which fifty-six American colonists pledged their lives, their fortunes and their sacred honor. Most of them paid a stiff price for making that pledge, but their cause prevailed and those first principles became the cornerstone of the American experiment. Alexander Hamilton, writing in Federalist 31 eloquently defined first principles: “In disquisitions of every kind, there are certain primary truths, or first principles, upon which all subsequent reasonings must depend. And there are other truths…which (are) so obvious in themselves, and so agreeable to the natural and unsophisticated dictates of common-sense, that they challenge the assent of a sound and unbiased mind, with a degree of force and conviction almost…irresistible.”
So just what were those first principles? We all know them. They are our unalienable rights to “life, liberty and the pursuit of happiness.” The right “to life” and to “the pursuit of happiness” are, as the Declaration of Independence states, “self-evident.” The right to “liberty”, however, is somewhat more abstract. Just what does (or did) that mean?
What liberty did these men envision that was “so obvious” and “so agreeable… to the common sense, (and) with a degree of force…almost irresistible”?
The liberty the founders envisioned was to be the very foundation of a society in which all citizens would be, (in the words of Milton Friedman two hundred years later), “Free to Choose.” It was to be the world’s first meritocracy, a representative democracy in which the people would, with regularity, determine by whom they would be governed under a constitution that, with careful specificity, substantially limited the power the central government could impose upon them.
That new governing paradigm mainly created by Washington, Madison, Hamilton, Jefferson, Adams and Franklin was magnificent in its simplicity and awesome in its strength.
By the end of its first century America was well on the way to becoming the greatest industrial power the world had ever seen, the place to which tens of millions of people from all over the world would flock, and home to an economic system that lifted untold millions out of poverty here and abroad.
We believe the nation would be well advised to revisit our American first principles. We have been steadily trading our founding paradigm of self-reliance, which de Tocqueville recognized and called “American Exceptionalism”, for a society in search of new and ever-expanding, government-provided entitlements.
American liberalism has, since the Great Depression, been transformed from its original, capitalist intent (that its citizens were liberated to pursue their own legitimate goals without undue government intervention), to a new, so-called, progressive definition that government should be liberal in providing for its citizens.
America (like most of Europe) has strayed from employing a social safety net, to embracing a cradle-to-grave, social welfare commitment. It is a commitment that has seduced most of the western world, and it is a commitment that probably cannot be kept. As Nobel-winning economist Milton Friedman observed, “Cutting government spending and government intrusion in the economy will almost surely involve immediate gain for the many, short-term pain for the few, and long-term gain for all.” Our current spending trajectory commits the nation to exactly the opposite course.
The number of workers in the United States and Europe who, essentially, support retired persons and other non-workers is uniformly shrinking, while the number of retirees and other non-workers who are the beneficiaries of that largess is uniformly growing. It has been estimated that the United States spends about six times more for the elderly than we do for our youth. The Congressional Budget Office (CBO), in its June 30th Report to the Congress warns:
“The retirement of the baby-boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services for many years… Without significant changes in government policy, those factors will boost federal outlays sharply relative to GDP in coming decades under any plausible assumptions about future trends in the economy, demographics, and health care costs.”
There are endless arrays of economic projections by economists on the left and on the right, and each of us is, of course, free to select which models we wish to embrace. What appears to be unimpeachable, however, is that our total national debt (public debt + debt owed to the Social Security Trust Fund and other government agencies) is now well in excess of the size of our entire economy, and it is projected to about double as a percent of GDP over the next decade.
The nation’s founders all had similar and strongly negative views concerning the use of unbridled national debt to fund the government. Many statists debate whether the founders’ views are relevant today. Perhaps, they didn’t have the sophistication of today’s economists and number crunchers, they tell us. Certainly, they invariably opine, the founders could not anticipate the changing nature of the nation, yet alone the world 230 years after the founding. We beg to differ.
We believe the founding generation still represents the country’s greatest assemblage of brilliance, intuition and clear thought ever to contemplate the governance of the nation. Let’s pause from the divisive and bitter discourse of this latest political season to ponder the advice they offered to those who would follow them in steering the future course of the nation.
George Washington: “No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt; on none can delay be more injurious…” Washington, perhaps, a reader of Adam Smith’s “The Wealth of Nations”, which was first published in 1776, wrote in a letter to Benjamin Harrison V (the father of future President William Henry Harrison and great grandfather of future President Benjamin Harrison), “A people who are possessed of the spirit of commerce, who see, and who will pursue their advantages, may achieve almost anything.”
John Adams: “In time of peace there can…be no justification for the creation of a permanent debt by the Federal Government. Its limited range of constitutional duties may certainly under such circumstances be performed without such a resort.”
Thomas Jefferson: “To preserve (the) independence (of the people), we must not let our rulers load us with perpetual debt…We shall all consider ourselves unauthorized to saddle posterity with our debts and (we shall all be) morally bound to pay them ourselves, and, consequently, within what may be deemed a period of a generation or the life expectancy of the majority.”
James Madison: (the father of the constitution): “I regret, as much as any member, the unavoidable weight and duration of the burdens to be imposed; having never been a proselyte to the doctrine that public debts are public benefits. I consider them, on the contrary, as evils which ought to be removed as fast as honor and justice will permit.”
The advice of the founders is, indeed, old and, perhaps, considered quaint by the political and economic elites who formulate our policies today, and who may presume to know better than the founders, given the current size and complexity of the nation and the world in which we find ourselves. Yet as we consider the founders’ words today, they still resonate with an almost haunting relevance.
Deep down inside we know we ignore their counsel at our own great peril.