"The U.S. Debt Crisis from the Founders' Perspective is republished with permission of Stratfor."
The U.S. Debt Crisis from the Founders' Perspective
Tuesday, October 15, 2013 - 04:22
By George Friedman
, and we now face the possibility that the United States will default on its debt. Congress is unable to resolve the issue, and President Obama is as obstinate as the legislators who oppose him. To some extent, our political system is functioning as intended -- the Founding Fathers meant for it to be cumbersome. But as they set out to form a more perfect union, they probably did not anticipate the extent to which we have been able to cripple ourselves.
Striving for ineffectiveness seems counterintuitive. But there was a method to the founders' madness, and we first need to consider their rationale before we apply it to the current dilemma afflicting Washington.
Fear and Moderation
The founders did not want an efficient government. They feared tyranny and created a regime that made governance difficult. Power was diffused among local, state and federal governments, each with their own rights and privileges. Even the legislative branch was divided into two houses. It was a government created to do little, and what little it could do was meant to be done slowly.
The founders' fear was simple: Humans are by nature self-serving and prone to corruption. Thus the first purpose of the regime was to pit those who wished to govern against one other in order to thwart their designs. Except for times of emergency or of overwhelming consensus, the founders liked what we today call gridlock.
At the same time, the founders believed in government. The U.S. Constitution is a framework for inefficiency, but its preamble denotes an extraordinary agenda: unity, justice, domestic tranquility, defense, general welfare and liberty. So while they feared government, they saw government as a means to staggeringly ambitious ends -- even if those ends were never fully defined.
Indeed, the founders knew how ambiguous their goals were, and this ambiguity conferred on them a sense of moderation. They were revolutionaries, yet they were inherently reasonable men. They sought a Novus Ordo Seclorum, a "New Order of the Ages," a term that was later put on the Great Seal of the United States, yet they were not fanatical. The murders and purges that would occur under Robespierre or Lenin were foreign to their nature.
The founders' moderation left many things unanswered. For example, they did not agree on what justice was, as can be seen in their divided stance on slavery. (Notably, they were prepared to compromise even on something as terrible as slavery so long as the Constitution and regime could be created.) But if the purpose of the Constitution was to secure the "general welfare," what was the government's role in creating the circumstances that would help individuals pursue their own interests?
There is little in the Constitution that answered such questions, despite how meticulously it was crafted, and the founders knew it. It was not that they couldn't agree on what "general welfare" meant. Instead, they understood, I think, that general welfare would vary over time, much as "common defense" would vary. They laid down a principle to be pursued but left it to their heirs to pursue it as their wisdom dictated.
In a sense, they left an enigma for the public to quarrel over. This was partly intentional. Subsequent arguments would involve the meaning of the Constitution rather than the possibility of creating a new one, so while we would disagree on fundamental issues, we would not constantly try to re-establish the regime. It may not have been a coincidence that Thomas Jefferson, who hinted at continual revolution, did not participate in the Constitutional Convention.
The founders needed to bridge the gaps between the need to govern, the fear of tyranny and the uncertainty of the future. Their solution was not in law but in personal virtue. The founders were fascinated by Rome and its notion of governance. Their Senate was both a Roman name and venue for the Roman vision of the statesman, particularly Cincinnatus, who left his farm to serve (not rule) and then returned to it when his service was over. The Romans, at least in the eyes of the founders if not always in reality, did not see government as a profession but rather as a burden and obligation. The founders wanted reluctant rulers.
They also wanted virtuous rulers. Specifically they lauded Roman virtue. It is the virtue that most reasonable men would see as praiseworthy: courage, prudence, kindness to the weak, honoring friendship, resolution with enemies. These were not virtues that were greatly respected by intellectuals, since they knew that life was more complicated than this. But the founders knew that the virtues of common sense ought not be analyzed until they lose their vigor and die. They did not want philosopher-kings; they wanted citizens of simple, clear virtues, who served reluctantly and left gladly, pursued their passions but were blocked by the system from imposing their idiosyncratic vision, pursued the ends of the preamble, and were contained in their occasional bitterness by the checks and balances that would frustrate the personal and ideological ambitions of others.
The Founding Father who best reflects these values is, of course, George Washington. Among the founders, it is he whom we should heed as we ponder the paralysis-by-design of the founders' system and the current conundrum threatening an American debt default. He understood that the public would be reluctant to repay debt and that the federal government would lack the will to tax the public to pay debt on its behalf. He stressed the importance of redeeming and discharging public debt. He discouraged accruing additional debt and warned against overusing debt.
However, Washington understood there would be instances in which debt had to be incurred. He saw public credit as vital and therefore something that ought to be used sparingly -- particularly in the event of war -- and then aggressively repaid. This is not a technical argument for those who see debt as a way to manage the economy. It is a moral argument built around the virtue of prudence.
Of course, he made this argument at a time when the American dollar was not the world's reserve currency, and when there was no Federal Reserve Bank able to issue money at will. It was a time when the United States borrowed in gold and silver and had to repay in the same. Therefore in a technical sense, both the meaning and uses of debt have changed. From a purely economic standpoint, a good argument can be made that Washington's views no longer apply.
But Washington was making a moral argument, not an argument for economists. From the founders' perspective, debt was not simply a technical issue; it was a moral issue. What was borrowed had to be repaid. Easing debt may power the economy, but the founders would have argued that the well-being of the polity does not make economic growth the sole consideration. The moral consequences are there, too.
The Republic of the Mind
Consequently, I think the founders would have questioned the prudence of our current debt. They would ask if it were necessary to incur, and how and whether it would be paid back. They would also question whether economic growth driven by debt actually strengthens the nation. In any case, I think there is little doubt they would be appalled by our debt levels, not necessarily because of what it might do to the economy, but because of what it does to the national character. However, because they were moderate men they would not demand an immediate solution. Nor would they ask for a solution that undermines national power.
As for federally mandated health care, I think they would be wary of entrusting such an important service to an entity they feared viscerally. But they wouldn't have been fanatical in their resistance to it. As much as federally mandated health care would frighten them, I believe fanaticism would have frightened them even more.
The question of a default would have been simple. They would have been disgusted by any failure to pay a debt unless it was simply impossible to do so. They would have regarded self-inflicted default -- regardless of the imprudence of the debt, or health care reform or any such subject -- as something moderate people do not contemplate, let alone do.
There is a perfectly valid argument that says nothing the founders believe really affects the current situation. This is a discussion reasonable and thoughtful people ought to have without raised voices or suspicion that their opponent is vile. But in my opinion, we have to remember that our political and even private life has been framed by our regime and therefore by its founders. The concept of limited government, of the distinction between public and private life, of obligation and rights, all flow from the founders.
The three branches of government, the great hopes of the preamble and the moral character needed to navigate the course continue to define us. The moral character was always problematic from the beginning. Washington was unique, but America's early political parties fought viciously -- with Aaron Burr even shooting Alexander Hamilton. The republic of the mind was always greater than the republic itself. Still, when we come to moments such as these, it is useful to contemplate what the founders had in mind and measure ourselves against that.
Silent Film: The General (About a Civil War Train) with Buster Keaton
On Wednesday Night, October 16, 2013, Congress via compromise and temporary funding, effectually agreed to postpone the debt crisis to a likely repeat between January 15 - February 7, 2014, AFTER the major holidays of Thanksgiving, Christmas, and New Year's Day. -- Brianroy
U.S. Foreign Policy from the Founders' Perspective
Tuesday, October 22, 2013 - 04:00
"U.S. Foreign Policy from the Founders' Perspective is republished with permission of Stratfor."
By George Friedman
Last week I discussed how the Founding Fathers might view the American debt crisis and the government shutdown. This week I thought it would be useful to consider how the founders might view foreign policy. I argued that on domestic policy they had clear principles, but unlike their ideology, those principles were never mechanistic or inflexible. For them, principles dictated that a gentleman pays his debts and does not casually increase his debts, the constitutional provision that debt is sometimes necessary notwithstanding. They feared excessive debt and abhorred nonpayment, but their principles were never completely rigid.
Whenever there is a discussion of the guidelines laid down by the founders for American foreign policy, Thomas Jefferson's admonition to avoid foreign entanglements and alliances is seen as the founding principle. That seems reasonable to me inasmuch as George Washington expressed a similar sentiment. So while there were some who favored France over Britain during the French Revolutionary Wars, the main thrust of American foreign policy was neutrality. The question is: How does this principle guide the United States now?
A Matter of Practicality
Like all good principles, Jefferson's call for avoiding foreign entanglements derived from practicality. The United States was weak. It depended heavily on exports, particularly on exports to Britain. Its navy could not guarantee the security of its sea-lanes, which were in British hands and were contested by the French. Siding with the French against the British would have wrecked the American economy and would have invited a second war with Britain. On the other hand, overcommitting to Britain would have essentially returned the United States to a British dependency.
Avoiding foreign entanglements was a good principle when there were no other attractive strategies. Nonetheless, it was Jefferson himself who engineered a major intrusion into European affairs with the purchase of the Louisiana Territory from France. Initially, Jefferson did not intend to purchase the entire territory. He wanted to own New Orleans, which had traded hands between Spain and France and which was the essential port for access between the Gulf of Mexico and the Mississippi-Ohio-Missouri river system. Jefferson sensed that Napoleon would sell New Orleans to finance his war in Europe, but he was surprised when Napoleon countered with an offer to sell all of France's North American holdings for $15 million. This would change the balance of power in North America by blocking potential British ambitions, opening the Gulf route to the Atlantic to the United States and providing the cash France needed to wage wars.
At the time, this was not a major action in the raging Napoleonic Wars. However, it was not an action consistent with the principle of avoiding entanglement. The transaction held the risk of embroiling the United States in the Napoleonic Wars, depending on how the British reacted. In fact, a decade later, after Napoleon was defeated, the British did turn on the United States, first by interfering with American shipping and then, when the Americans responded, by waging war in 1812, burning Washington and trying to seize New Orleans after the war officially ended.
Jefferson undertook actions that entangled the United States in the affairs of others and in dangers he may not have anticipated -- one of the major reasons for avoiding foreign entanglements in the first place. And he did this against his own principles.
The reason was simple: Given the events in Europe, a unique opportunity presented itself to seize the heartland of the North American continent. The opportunity would redefine the United States. It carried with it risks. But the rewards were so great that the risks had to be endured. Avoiding foreign entanglements was a principle. It was not an ideological absolute.
Jefferson realized that the United States already was involved in Europe's affairs by virtue of its existence. When the Napoleonic Wars ended, France or Britain would have held Louisiana, and the United States would have faced threats east from the Atlantic and west from the rest of the continent. Under these circumstances, it would struggle to survive. Therefore, being entangled already, Jefferson acted to minimize the danger.
This is a very different view of Jefferson's statement on avoiding foreign entanglements than has sometimes been given. As a principle, steering clear of foreign entanglements is desirable. But the decision on whether there will be an entanglement is not the United States' alone. Geographic realities and other nations' foreign policies can implicate a country in affairs it would rather avoid. Jefferson understood that the United States could not simply ignore the world. The world got a vote. But the principle that excessive entanglement should be avoided was for him a guiding principle. Given the uproar over his decision, both on constitutional and prudential grounds, not everyone agreed that Jefferson was faithful to his principle. Looking back, however, it was prudent.
The Illusion of Isolationism
The U.S. government has wrestled with this problem since World War I. The United States intervened in the war a few weeks after the Russian czar abdicated and after the Germans began fighting the neutral countries. The United States could not to lose access to the Atlantic, and if Russia withdrew from the war, then Germany could concentrate on its west. A victory there would have left Germany in control of both Russian resources and French industry. That would have created a threat to the United States. It tried to stay neutral, then was forced to make a decision of how much risk it could bear. The United States opted for war.
Isolationists in World War II argued against involvement in Europe (they were far more open to blocking the Japanese in China). But the argument rested on the assumption that Germany would be blocked by the Soviets and the French. The alliance with the Soviets and, more important, the collapse of France and the invasion of the Soviet Union, left a very different calculation. In its most extreme form, a Soviet defeat and a new Berlin-friendly government in Britain could have left the Germans vastly more powerful than the United States. And with the French, British and German fleets combined, such an alliance could have also threatened U.S. control of the Atlantic at a time when the Japanese controlled the western Pacific.
A similar problem presented itself during the Cold War. In this case, the United States did not trust the European balance of power to contain the Soviet Union. That balance of power had failed twice, leading to alliances that brought the United States into the affairs of others. The United States calculated that early entanglements were less risky than later entanglements. This calculation seemed to violate the Jeffersonian principle, but in fact, as with Louisiana, it was prudent action within the framework of the Jeffersonian principle.
NATO appeared to some to be a violation of the founders' view of a prudent foreign policy. I think this misinterprets the meaning of Jefferson's and Washington's statements. Avoiding entanglements and alliances is a principle worth considering, but not to the point of allowing it to threaten the national interest. Jefferson undertook the complex and dangerous purchase of Louisiana because he thought it carried less risk than allowing the territory to remain in European hands.
His successors stumbled into war partly over the purchase, but Jefferson was prepared to make prudent judgments. In the same way, Woodrow Wilson, Franklin Roosevelt and Harry Truman, realizing that avoiding foreign entanglements was impossible, tried to reduce future risk.
Louisiana, the two world wars and the Cold War shared one thing: the risks were great enough to warrant entanglement. All three could have ended in disaster for the United States. The idea that the oceans would protect the United States was illusory. If one European power dominated all of Europe, its ability to build fleets would be extraordinary. Perhaps the United States could have matched it; perhaps not. The dangers outweighed the benefits of blindly adhering to a principle.
A General Role
There is not an existential threat to the United States today. The major threat is militant Islamism, but as frightening as it is, it cannot destroy the United States. It can kill large numbers of Americans. Here the Jeffersonian principle becomes more important. There are those who say that if the United States had not supported Israel in the West Bank or India in Kashmir, then militant Islamism would have never been a threat. In other words, if we now, if not in the past, avoided foreign entanglements, then there would be no threat to the United States, and Jefferson's principles would now require disentanglement.
In my opinion the Islamist threat does not arise from any particular relationship the United States has had, nor does it arise from the celebration of the Islamic principles that Islamists hold. Rather, it arises from the general role of the United States as the leading Western country. The idea that the United States could avoid hostility by changing its policies fails to understand that like the dangers in 1800, the threat arises independent of U.S. action.
But militant Islamism does not threaten the United States existentially. Therefore, the issue is how to apply the Jeffersonian principle in this context. In my opinion, the careful application of his principle, considering all the risks and rewards, would tell us the following: It is impossible to completely defeat militant Islamists militarily, but it is possible to mitigate the threat they pose. The process of mitigation carries with it its own risks, particularly as the United States carries out operations that don't destroy militant Islamists but do weaken the geopolitical architecture of the Muslim world -- which is against the interests of the United States. Caution should be exercised that the entanglement doesn't carry risks greater than the reward.
Jefferson was always looking at the main threat. Securing sea-lanes and securing the interior river systems was of overwhelming importance. Other things could be ignored. But the real challenge of the United States is defining the emerging threat and dealing with it decisively. How much misery could have been avoided if Hitler had been destroyed in 1936? Who knew how much misery Hitler would cause in 1936? These thoughts are clear only in hindsight.
Still, the principle is the same. Jefferson wanted to avoid foreign entanglements except in cases where there was substantial benefit to American national interests. He was prepared to apply his principle differently then. The notion of avoiding foreign entanglements must therefore be seen as a principle that, like all well-developed principles, is far more complex than it appears. Foreign entanglements must be avoided when the ends are trivial or unattainable. But when we can get Louisiana, the principle of avoidance dictates involvement.
As in domestic matters, ideology is easy. Principles are difficult. They can be stated succinctly, but they must be applied with all due sophistication.
Despite the New Republic of the United States negotiating the Jay Treaty during the Presidency of George Washington
in order to appease the British, we had to refight a second smaller war of Independence while Britain were occupied with Napoleon's movements and engaging in military actions against the French in Spain.
We learn from historians who wrote in the first 40 years or so after the Civil War, that the war of 1812 especially affected the Northeast Industrialists. America was in the midst of a Bull or Booming Economy from 1807 - 1837. The Industrialists and Financiers that dominated the Northeast United States were generally those that led us to an internal conflict with a South that operated on its own backward and slow placed Feudal System (like something out of Rome or the Middle Ages) and refused to develop and "progress" at the pace the Northeast Industrialists wanted. This, more than slavery, prompted the Northern Industrialists and Financiers to use the Federal Government (and, in the months preceding the Civil War, its military) to goad the South into secession and a Civil War, using "slavery" as an excuse and emotional "flashpoint". It was not until 1862, when the South was being turned and losing, that the new theory about the war was that it turned on or was in most ways connected in one way or another about slavery. Slavery as the primary cause of the war was not the issue in 1861, that invention came later. In fact, prior to the South removing themselves , they offered up the abolition of all slave importation, and that if Congress wished to abolish slavery by Legislation, they could do so without organized Southern protest. The North turned them down. In reality, the Civil War was about the usurpation of States Rights as a co-equal to the Federal Government, as envisioned by the Founders from 1776 - about 1789, prior to the Constitution's rewrite of our Government into a Republic.
The Civil War of 1861 -1865, being a loss by the South to return to the Original Government of the United States, the northeast Industrialists and Merchant Banker Alliances then began to loot the South and especially use war-time alliances and new found trust by those in Federal positions to entangle themselves and influence all facets of our Government, including the foreign as well as domestic policies of the United States, by controlling and financing key members of the Legislative and Executive Branch of our Government, and even creating a new financial system that guaranteed their behind the scenes oligarchy major controlling influence from that time to this. In order to free ourselves from foreign entanglements, we must first break and destroy the Federal Reserve, which is the Oligarchy of a still yet unknown entity of representatives of as yet to be revealed multi-corporate Industrialists and Bankers, some of whom sit on dozens of Corporate Boards, above the scrutiny of conflicts of interest and normal rules and laws that apply to the rest of us.
It seems to me, that a dissolving of the Federal Reserve is the only way to go, and then telling the world that the Federal Reserve co-signed off on all the debt of the United States, and as of this moment in time, the United States Government absolves itself of all debts, creates a new currency backed by platinum, gold and silver, and from now on prints its own money and is accountable to any future debts it accrues to be paid back within 10 years, guaranteed in part by a Balanced Budget Amendment requiring a fully balanced budget bill passed by both Houses of Congress 3 months before the next fiscal year begins or Congress is to lose all salary for the rest of that and the coming fiscal year. We will also need to ban Congress from all perks and privileges, freeze out all Congressional pensions, and make them live and act within a more work-prone Spartan like atmosphere. And if any member of Congress refuses to read any Legislation he votes upon, he or she is to be expelled from Congress. If it is a bill in excess of 100 pages, it cannot any longer be more than 1,000 pages in length, and must be available in physical and digital form for review no less that 10 business days before it can be voted upon. A physical copy to be delivered to the chamber desk or seat of and the Capitol office of each Congressman or Congresswoman, so they are without excuse.
Those would be my suggestions or recommendations on how we start reclaiming our corrupted Republic run by hundreds (if not thousands) of cross-wired oligarchies of various special interests and often anti-Constitutional as well as corrupt influences, it seems to me.