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Changing The Constitution

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Published : June 30th, 2020
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Category : Editorials

Listing the changes you would make to the Constitution is an old parlor game among conservative intellectuals. One recent offering in this genre is The Liberty Amendments (2014), by Mark Levin. But, we are in a period where, before it is over, I think we will have changes in the Constitution, either formalized, or de facto. We better start thinking about it now, so that they will be good changes, not bad ones. Here is my list.

Economics is my main gig, so let’s start with the “economic Constitution.”

Money Based on Gold. This is in Article 1 Section 10 already, but in a brief form that was appropriate for the 1780s (basically, a mandate to use gold and silver coins). The United StatesUSM used money based on gold (in principle) from 1789 to 1971, and became the wealthiest and most prosperous nation in the history of the world. Since floating currencies were introduced in 1971, things haven’t been going so well. In a few years, when we have learned to hate “Modern Monetary Theory,” making a new and up-to-date Amendment to insure that such errors do not happen again will seem like a simple act of self-preservation.

Uniform, flat, indirect taxes. The “uniformity clause” (Article 1 Section 8) was to insure that the same taxes would apply to everyone everywhere. There would not be high taxes for that person, and low ones for another — the principle of the “progressive income tax,” which was one of Karl Marx’s ten principles from the Communist Manifesto. Direct taxes (like the income tax) were effectively made unconstitutional until the Sixteenth Amendment of 1913. The Federal government was to raise money from indirect taxes only — basically, sales taxes and tariffs. The modernized version of this would be a national sales tax or, somewhat better in my opinion, a Value-Added Tax — combined with a repeal of the Sixteenth Amendment and elimination of the income tax. Income taxes could be applied at the State level, but, I think that States that abused this policy would find themselves quickly depopulated. A new and up-to-date Amendment would repeal the Sixteenth Amendment and limit the Federal government to indirect (sales tax, tariff, VAT) taxes only.

Elimination of all welfare-type spending at the Federal level. All welfare-type programs (healthcare, education, needs-based programs) should be conducted at the State level only. The Federal government limits itself almost entirely to foreign affairs: the military, foreign policy, trade and immigration. This is simply a return to the Enumerated Powers of the original Constitution, and which served as the basic template until the explosion of welfare-related spending during the 1960s. The “General Welfare Clause” was supposed to exclude what was known as “specific welfare” — that is, benefits for individuals. For example, military defense or National Parks support “general welfare,” from which all benefit, but any kind of direct payouts for individuals or corporations are forbidden.

Social Security is something of an outlier here, but it should be eventually be replaced by a “provident fund” system (basically, a 401(k)—like personal account with mandatory contributions) as is used by Singapore and more than thirty other governments worldwide, and which is now considered best practices by the World Bank.

Healthcare would be entirely a matter for the States. The best States would adopt something like the amazingly successful free-market-based system of Singapore, which produces some of the best results in the world at one-quarter the cost of the present U.S. system, while also providing universal coverage.

This would reduce the size of Federal spending by at least 50%, which means that we could also reduce Federal taxes. A simple VAT at 10% would cover the whole thing. But, taxes at the State level might be higher, since welfare-type spending would be concentrated there. States would become interesting experiments in taxing and spending policies, and then would have to compete against each other. Bring it on.

Term limits. Term limits for Congresspeople was discussed at the original Constitutional convention. Now we know that their choice to go with no limits — originally, not even for the president — was a mistake. Senators should be limited to one term of six years. Congresspeople could be limited to three terms of two years. Politics should be public service, not a career.

Repeal the Seventeenth Amendment. The original Constitution made Senators appointable by the States. Like other high-profile appointments today (Treasury Secretary, Secretary of State), this position would tend to be held by an extremely capable individual probably with an impressive career in business or perhaps the military (since career politicians were rarer then). The Framers of the Constitution did not trust Democracy much. Their model was the super-successful Roman Constitution, and also the informal and super-successful British Constitution. Both created world-beating empires and thriving domestic societies. The idea was a balance between a Democractic element with equal representation among the people (the Tribunes in Rome, the House of Commons in Britain, the House of Representatives in the United States), and an aristocratic element that represented property, business, talent and education. In Rome this was the Senate; in Britain, the House of Lords; in the U.S., the Senate. Also, as appointees by the States, the U.S. Senate would prevent the excessive accumulation of power at the Federal level. Today, I think it would be very nice to have a Senate of appointees of Treasury Secretary-type caliber — to balance out a House with mass-market-pandering characters like Maxine Waters or Alexandria Ocasio-Cortez — as long as not too many of them are from Goldman SachsGSBD.

A Role for Regulation. Regulation, and the gigantic and unaccountable regulatory administrative state, is something of a new element that did not really exist in the 1780s. I agree that it has become a monster, but I don’t think we can just eliminate it. So, we have to put it somewhere — at the Federal, State or Municipal level. Since it would probably be a good thing not to have every State with its own regulatory framework, the Federal level might be best. This role should be formalized in some way, and made subject to democratic processes and the checks and balances of all other legislation. A good model for how the regulatory administration could be tamed and made a regular working part of the Constitution has been presented by Senator Mike Lee in Our Lost Constitution (2016).

Taming the Supreme Court. The Supreme Court was never supposed to have the powers it has today, of “legislating from the bench.” That began with Marbury vs. Madison (1803). That’s why the checks and balances found elsewhere in the Constitution were not applied to the Supreme Court. Contemplating the eventual outcome of this (he was president at the time of Marbury vs. Madison), Thomas Jefferson said: “The germ of dissolution of our federal government is in the constitution of the federal Judiciary; an irresponsible body (for impeachment is scarcely a scare-crow) working like gravity by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief, over the field of jurisdiction, until all shall be usurped.” And that’s exactly what happened.

The Federal government that comes out of this exercise is a lot different than what we have today, and also, very similar to what we had in 1910. State governments would become a hotbed of experimentation, with vastly expanded new roles. With a century of hindsight, we find that the Framers mostly got it right the first time. But, this is not just an exercise in turning back the clock. We are updating the Constitution to today’s knowledge and today’s needs. Probably you have your own notions. Now is a good time to start discussing them.

(This item originally appeared at Forbes.com on June 26, 2020.)

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Nathan Lewis was formerly the chief international economist of a firm that provided investment research for institutions. He now works for an asset management company based in New York. Lewis has written for the Financial Times, Asian Wall Street Journal, Japan Times, Pravda, and other publications. He has appeared on financial television in the United States, Japan, and the Middle East.
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