Killing Capitalism, and Killing the Middle Class

By Douglas V. Gibbs
Author, Speaker, Instructor, Radio Host

The Founding Fathers, during the Constitutional Convention in 1787, created the federal government, and gave the new central government absolutely no authorities regarding American Economy except for the following clauses (All found in Article I, Section 8, and the authorities are only granted to Congress - not a central bank like the Federal Reserve, and not to the other two branches of government, executive or judicial):

1.  Congress shall have Power To lay and collect Taxes.  In Article I, Section 9 a clarification is applied, explaining that the federal government could not lay a direct tax against the people.  That clause was superseded by the 16th Amendment during the Progressive Era.

2.  To borrow Money on the credit of the United States.  During the convention, according to James Madison's notes, it was assumed that borrowing money would only occur during time of war.  Statist Alexander Hamilton, however, argued that the United States should be in perpetual debt to not only to build the country's credit, but also as a means of discouraging States from seceding from the Union.

3.  To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.  This clause has been grossly misused.  The original definition of "regulate" in this case was "to put in good order."  According to James Madison, for the federal government to regulate the federal government would use legislation as a means to provide agreements between the States after mediating disputes.  In the case of interstate commerce, if there are no disputes between the States, interference by the federal government is not authorized.

4.  To establish...uniform Laws on the subject of Bankruptcies.  This was intended to prevent abuse of bankruptcy laws in States by simply moving to a different State in an attempt to escape said bankruptcy.

5.  To coin Money, regulate the Value thereof, and of foreign Coin.  Note that the Constitution does not authorize paper money, nor a central bank like the Federal Reserve.  Alexander Hamilton, however, was able to convince President Washington and his allies in Congress to create the Bank of the United States with his unconstitutional argument regarding "implied powers."

That's it.  There are no authorities granted to the federal government to regulate banks as we saw with Dodd-Frank, nor are there any authorities granted for the federal government to interfere in the market in any other ways.  If it is necessary for "regulations" to be created regarding the behavior of businesses or corporations in order to protect workers or the consumers, the authority lies solely with the individual States.

The economy was expected to be of the people and by the people.  A free and dynamic market where government had almost no influence, and where people were capable of moving up and down in the system based on their hard work and successes or failures.

In free market systems, when the central government remains out of the picture, a middle class naturally emerges.  While larger companies, and the very wealthy at the top of those corporations, carry a lot of power in such a system, the free market self-regulates based on consumer buying habits and the natural cycles associated with supply and demand.  Problems arise when corporate giants use their money to buy political favors - which is why the Founding Fathers wanted government not involved in the natural cycles of the economy as much as possible.  Heavy taxation against the market system is also destructive, leaving less capital in the system for growth, innovation, and product development.

Intervention by a central government places the existence of the middle class at risk.  When the rules of the game are established by a central government, the government's aim is not to protect the market, but to expand the powers of the governmental system.  In short, destruction of the private sector and the middle class by government intervention is by design.  The true agenda, however, is often hidden in order to protect the political power of those who support central governmental control.

This is not to say there should be no rules.  As stated earlier, there are some authorities granted to the federal government regarding economic matters.  However, the majority of the rule making, if there must be governmental participation, is authorized to the local governments, the States, counties and cities.  Localism is the key to a successful society, be it in reference to liberty, or economic prosperity and stability.  As per the 10th Amendment, if an authority does not belong to the federal government, and is not prohibited to the States, it is a State authority - thus, reinforcing the concept of localism.

It is best to let the market naturally regulate itself, however.  Local rules must be sparingly applied.

Liberal leftists claim that conservative methods regarding a free market economy means allowing control by the big corporations, but as stated earlier, the true regulatory power belongs to the consumers who are capable of making, and breaking, any business venture - big, or small - through their buying habits, and buying preferences.

That all said, exceptions do exist in terms of federal intrusion.  There are times when disputes between the States actually hinder the movement of commerce.  In those cases, it is the job of Congress to mediate, find common ground between the parties, and issue legislation establishing a new agreement regarding the movement of commerce that is acceptable to all parties.

The liberal left Democrats believe that government's role must be more extensive.  They believe that markets don't exist unless government creates them, and sets the rules.  They believe that the middle class is also a creation that emerges from government regulation, when in reality, government's goal through expansion is always to reduce the size of the middle class, and eventually to eliminate it.  As Karl Marx taught, the most effective way to destroy the middle class is through heavy taxation.  That is how Soviet Russia did it.  Taxation became so punitive that eventually everyone wound up in poverty, and dependent upon the government.

Venezuela is a most recent example of government control of the market leading to poverty, and economic collapse.

Another example of liberalism destroying hope, an economy, and an orderly society is San Francisco.  Years of liberal policies have the city in economic trouble, and in the midst of a societal breakdown.

The hope, then, is that the new Trump administration will help reverse the big government trend, and return the economy to where it belongs. . . to the people.  However, that will only happen if the federal government begins to withdraw from its influence of the economy.

-- Political Pistachio Conservative News and Commentary