We Have Come A Long Way

October 22, 2009

by Mario Rizzo  

This is more an intellectual experiment than a normal post. What I am asking you to do is to clear your mind of its cobwebs. Just “marvel” at the contrast between the classic statements of the limits of the federal government and the recent report in the Wall Street Journal:   

“The U.S. pay czar will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, with the vast majority of salaries coming in under $500,000, according to people familiar with the government’s plans.

As expected, the biggest cut will be to salaries, which will drop by 90% on average. Kenneth Feinberg, the Treasury Department’s special master for compensation, also intends to demand a host of corporate governance changes at those firms.”

I am not here concerned with whether this is a good idea but I am simply in a state of naïve wonderment that we got to the point where this is legally possible.  

Consider now the classic limited-government statements:   

1. Powers given to Congress: “To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.” (U.S. Constitution, Article I, sec.8, emphasis added.)  

Comment: The list contains no reference to bailouts or pay czars.  

2. “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.” (U.S. Constitution, Tenth Amendment)

3. James Madison, the Father of our Constitution, clarified the authority of the federal government in the Federalist Papers #45: “The powers delegated by the proposed Constitution to the federal government are few and defined.”

I know the constitutional history but sometimes you just can’t believe it.

This is the world we lost.

25 Responses to “We Have Come A Long Way”


  1. [...] czar”’s decree that bailout recipient CEOs must cut their pay, Mario Rizzo observes: We Have Come A Long Way « ThinkMarkets: I am not here concerned with whether this is a good idea but I am simply in a state of naïve [...]


  2. [...] Mario Rizzo You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or [...]


  3. It is instructive to read Grover Cleveland’s veto of the Texas Seed Bill. http://en.wikisource.org/wiki/Cleveland's_Veto_of_the_Texas_Seed_Bill


  4. And yet my good friend Steve says it’s getting better all the time from a long run perspective.

  5. RickC Says:

    Might a better title be “Look How Far We’ve Fallen” or “Look How Much We Seem to have Forgotten?”

  6. Bob D Says:

    It is not legal, as reported by Judge Andrew Napolitano. It might set a good precedent. The taxpayers could clawback all money and benefits paid to all Presidents, Members of Congress, Courts, State and Local Governments that spent our money in a fiscally irresponsible manner and putting us in debt. What’s good for the goose is good for the gooser!

  7. Roger Koppl Says:

    Dave asks how things could be getting better as Steve Horwitz insists (http://myslu.stlawu.edu/~shorwitz/Good/index.htm) if Mario is right to lament “the world we lost.” I think Steve and Mario are both right and I think it matters why.

    I think Mario is right about the lost world. I don’t see a lot of ambiguity there. The corruption of small government principles, however, has been correlated with an increase in equality. In particular and especially, blacks and women have enjoyed increasing freedom and equality over time. It has been a more steady growth than some accounts seem to allow. For example, the migration of many blacks from the rural South to factory jobs in the North was a great increase in liberty for those making the move. Increased equality for blacks and women means greater overall liberty for the country, including greater overall economic freedom and an improved division of labor. That makes us richer.

    I think Mario is right about the lost world. But we should not neglect the statist oppressions that have been shed as we moved from a more decentralized system to a more centralized system. Many of the local oppressions of local governments were stripped away as we gave the central government more power. That centralized power is dangerous and I tremble before it. But the loss was accompanied by a gain.

    I think classical liberals and libertarians have tended rather systematically to neglect the gains in liberty we have seen over the decades. This skewed view creates the paradox Dave notes. We say liberty is slipping away, but everything is getting better and better. Adding to the paradox, this skewed view may lead us to underestimate the present danger. As the statist oppressions of local governments and of sex, class, and race are swept away, the danger and loss of increased centralization grow in relative importance. Those local oppressions are not gone, as I have learned working on problems of forensic science. But their relative importance seems to be declining.


  8. The Review&Outlook section of today’s Wall Street Journal has a good editorial on the pay issue. The healcare bill will also test the Constiution if it includes a provision compelling the purchase of health insurance.


  9. Roger is eloquent but ultimately wrong. He conflates equality and liberty (and wealth and liberty). We are all equal in lost liberty. Just to take up one issue: as chronicled by Thomas Sowell, blacks had made great material progress by the dawn of the 20th century. That continued until the Great Depression. The New Deal was a raw deal for them. Black progress resumed after WWII, but actually slowed after the passage of the Civil Rights acts. Markets not politics were the source of Black progress (and minorities generally). The eclipse of markets by politics harms everyone.

  10. Mario Rizzo Says:

    I agree with Jerry that Roger is mixing liberty with wealth in much of his comment. I do agree, however, that the federal government has at certain times and in certain respects ensured the liberty of, say, blacks. The 13th, 14th, and 15th Amendments to the Constitution are examples. Some, though not all, of the civil rights legislation more recently has done the same.

    It is also true that greater liberty often leads to greater wealth. But the two are different.

    If the federal government’s intervention in the traditional domain of the states had been consistently in the defense of liberty against the states’ violations I’d have to revise my views. However, I am taking about the other stuff. For example, the interpretation of the commerce clause that makes almost anything interstate commerce if the federal government wants to control it.


  11. Yes, Mario. But the Privileges or Immunities Clause of the 14th Amendment was neutralized in the Slaughterhouse cases. Rights reclaimed at the State level often occur because of private litigation. Minorities most need these protections.

  12. Roger Koppl Says:

    Jerry,

    I see that when I spoke of the slow and steady improvement in equality for blacks and women, I seemed to have been equating income equality with equality before the law. I did not intend that, however. I was trying to say we have fewer lynching, more rights of contract, greater freedom to marry, and so on. I meant more real freedom. Greater equality of income is consequence of that increase in equality, not the substance of it.

    I was talking about the sort of thing you mention, I think. I gave the example of blacks migrating North. They were less likely to be beaten, less subject to arbitrary arrest, and so on. I might have mentioned the decline in lynchings or any of several other metrics of black oppression. Lynchings are a good example because local authorities were often complicit in them. The FBI is less likely to lynch a black man then the local sheriff’s office. Until quite recently, women were often unable to buy real estate and the law would not recognize rape within a marriage. We’re talking about basic freedoms here.

    Among free people in this country, there has been a diminishment of economic liberty over time. But the majority of the adult population (blacks + women) were not as free as the minority (white men). That freedom gap has been closing over time. I believe the gains to women and blacks exceeds the losses to white men, overall.

    We are far from done, by the way! The war on drugs oppresses blacks disproportionately as do the many infirmities of our criminal justice system.

    I am reminded of Adam Smith’s discussion of slavery. He hated slavery, but thought an otherwise free country had no particular tendency toward slave emancipation.

    Smith lamented, “This institution therefore of slavery, which has taken place in the beginning of every society, has hardly any possibility of being abolished.” Though unproductive in Smith’s eyes, slavery persists because of the “love of domination and tyrannizing.” Lectures; 1762-3, 114-117. Here is the url:

    http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php&title=196&search=%22domination%22&chapter=55607&layout=html#a_920050

    I’m afraid Smith had a good point about slavery. Generalizing, it seems fair to say that injustices of sex, race, and class can persist indefinitely even in market-based societies. I think there are some tendencies to break down such injustices, but those tendencies can be stymied for generations because such injustices can benefit the oppressors and because of humanity’s “love of domination and tyrannizing.”

    I think classical liberals and libertarians should be more sensitive to these points. This is a moral imperative, of course, assuming my factual interpretation is about right. It is also an intellectual point. If my factual interpretation is correct, it resolves the paradox Dave drew our attention to above.

  13. Roger Koppl Says:

    Jerry,

    I totally agree on the New Deal. I have a longer reply awaiting moderation, which I’m sure will come up soon.


  14. Roger,

    Thanks for the clarification. I can’t do the kind of balancing test you employ. One group’s freedom goes up, the other down, and there is a net gain. The changes you describe occurred at very different times in our history. The black progress you describe predates the New Deal losses of liberty for all. Marriage and property law has benn and remains state-based. One would need to do a 50-state analysis. The slavery issue is very complex. But manumission occurred frequently in the antebellum South. And, of course, Britain proved Smith wrong by ending slavery peacefully for moral reasons. Moral considerations also led the Spanish kings to intervene on behalf of the American Indians in the American colonies centuries earlier.

  15. Roger Koppl Says:

    It certainly is a balancing test, Jerry, so it’s hard to push the discussion very far on a blog. One advantage for my view is how it helps solve the paradox of declining liberty and increasing wealth. It resolves the paradox by noting ways in which liberty has been growing and attributing the increase in wealth (in part) to a net increase in liberty.

    I should have mentioned two other important factors contributing to wealth and liberty, foreign trade and migration. Globalization and all that. Trade is obvious. I think we should probably count migration, too, as an increase in liberty for Americans. If the relevant population is people here now and most of the new comers experienced an increase in liberty moving to the US, then it would seem to follow that immigration has increased the liberties of Americans. This suggests that Europeans are now gaining in liberty too, BTW.

    I think you neglected the elimination of Jim Crow, which increased liberty for blacks. I tend to think voting rights probably reduced race-based state oppressions such as all-white juries judging black defendants. I admit, however, that there is plenty on the other side of the scale, starting with the war on drugs.

    I’m not sure which way the liberty of black men in America has gone since, say, 1965. I still tend to say their liberty has gone up, but some of today’s oppressions are pretty raw. If we consider women, foreign trade, and immigrants, however, then I think it’s probably fair to say liberty has gone up since 1965. But, again, your point about balancing tests is completely right and that necessarily introduces doubt. I fully agree on that point.

  16. Daniil Gorbatenko Says:

    Dear Professor Koppl,

    Thanks for an interesting and provocative hypothesis. I cannot agree with your take, though. For me, the problem with your analysis stems from the attempt to measure freedom quantitatively as if it were some kind of an economic good.

    But freedom is a quality relating to individuals. It is a degree of autonomy an individual may enjoy in a society. Thus understood, individual freedom in the US has greatly diminished since the end of the 19th century.

    The alleged increases of personal freedom that you cite seem to have more to do with changes in the preferences of the people and the living conditions than to the reduction of government intervention on state level. In other words, not many people in the 19th century realized the need for abortion or gay marriage. Thus, those were not deemed part of individual freedom that deserves protection from outside interference.

    The issue of African-Americans is more complicated. It is hard to argue that for them freedom has not increased since the Civil War.

    However, it does not necessarily follow from this statement that their freedom would not have increased the same way or even more without a huge expansion of federal authority.

    I would be more optimistic about the future of a society where the majority exercises absolute possible freedom while a minority is discriminated against than a society where the maximum degree of individual freedom a person may have has gradually been being reduced.

    The trajectory of the first hypothetical society just seems more genuinely progressive for me.

  17. Seth Says:

    Great post. I’m with you. We derailed from the idea of limited government long ago. I believe the Friedmans pointed out in the 80s that we have given up a lot of liberty without picking up concentrated tyranny, yet.

    While I don’t like we we’re going, I do think the benefits are that people are re-learning, at a fast pace, the benefits of limited government – mainly because the government is a credible source of major amounts of power.

    As long as we retain the right to vote and election results remain relatively fair, I have faith we can reverse course.

  18. Roger Koppl Says:

    Daniil,

    If freedom is a *degree* of autonomy, can it not be ranked according to greater and less?

  19. Daniil Gorbatenko Says:

    Prof. Koppl,

    I see your point. I should not have been so dismissive about measurement.

    What I was trying to say was that although for the minority freedom has increased, the potential freedom that they would probably have got anyway had diminished. So they actually lost part of their freedom even as they gained what they did because they could have gained much more. Not to mention the majority who outright lost substantial part of their freedom.

    Therefore, I belive that the trajectory that the US has been on since the end of 19th century is wrong.

  20. Roger Koppl Says:

    Daniil,

    We probably have similar ideas about what liberty is, so it is hard to say how far apart we really are on this issue. If my historical interpretation is not mistaken, however, it was a majority, not a minority, that gained in liberty in spite of the losses we probably both lament. Women plus blacks make a majority, even neglecting immigrants (as I was at first).

  21. Daniil Gorbatenko Says:

    Prof. Koppl,

    Even if we agree that women at the time realized that their freedom was infringed upon which is debatable, my point was that both blacks and women would have gained much bigger prize by the end of the 20th century if it had not been for the expansion of the federal government.

    I also have a hypothesis that the expansion of the federal government also led to the increase (although to a lesser degree)of the intrusive powers of the state governments. This might explain the Jim Crow phenomenon and why it took so long to fully liberate blacks and even women.

  22. Roger Koppl Says:

    Daniil,

    “my point was that both blacks and women would have gained much bigger prize by the end of the 20th century if it had not been for the expansion of the federal government.” Absolutely. Assuming the same legal gains such as the right not be raped by your husband, the increase and centralization of power was a bad thing. The Fed, for example, was a bad thing. Anti-trust was a bad thing. The growing network of “regulation” was a bad thing. I don’t think I was denying any of that; certainly, I did not mean to.

    Let us not forget that war is a bad thing, and it is the federal government that makes war. Opinions will differ on how to judge American military actions in different cases, but we could probably agree to condemn at least some cases of American military action since 1890 or so. Mark Twain was eloquent on this point:

    http://www.midwinter.com/lurk/making/warprayer.html

    Let us recall the context of this exchange of comments. Mario noted that we should be shocked by the very existence of a “pay czar.” It is a terrible sign of (true) liberalism in eclipse. Mario lamented “the world we lost.” Boy is he right! Dave noted the paradox that loss raises, however, given our great and growing wealth. I merely drew our attention to some important ways which liberty has grown in spite of the world we lost. The facts I draw attention to help to resolve the paradox. IMHO they also point out how great the current danger is. Further gains of the sort I have been talking about seem likely to be relatively modest. We’re going to get gay marriage, for example, but that affects only a relatively small population. Thus, Mario’s post identifies losses unlikely to be matched by corresponding gains elsewhere. In other words, we may be in trouble and, in any event, we should be afraid, very afraid of this latest round of growth in state power.

  23. Daniil Gorbatenko Says:

    Prof. Koppl,

    Ok. I probably misinterpreted you. I thought you meant that overall freedom on net has increased which I cannot agree with.

  24. Roger Koppl Says:

    Perhaps I’ve been inconsistent. I thought I’d been pretty consistent. I’m sorry to have been unclear. Please let me try again.

    In the US, overall freedom on net has increased since, say, 1900 even though freedom for native-born white men may have declined because of bad things like anti-trust laws, “regulation,” the Fed, and licensing restrictions. This net increase in freedom is attributable in part to greater freedom for blacks, women, and immigrants, and it is attributable in part to greater freedom to trade with foreigners, at least in the post-war period.

    Freedom and wealth are different things. Wealth is generally a consequence of freedom, however, and so the increased wealth of Americans over time is evidence of increased freedom for Americans. To note such gains in liberty is not to endorse bad things like creating a central bank, launching a war of aggression, or chewing with your mouth open.

    If my interpretation of the historical record is about right it resolves the paradox that we have been going straight to hell for over a century while growing rich, fat, and happy. It turns out we have not really been going to hell after all. Instead some freedoms have been lost and others gained. On net, so far, the trend has been favorable. As Ludwig von Mises so rightly noted, however, “trends change.” Thus, we should not be complaisant about liberty. The facts Mario pointed in his original post are alarming and his was right to note with alarm “the world we lost.”


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