Letters for families based on the book “It Can Be Done” @studentsleadusa
We write today to discourage Americans from crossing a line into harmful, creeping socialism. At some point, excessive government taxes, laws, spending, and business regulation cross over into control of business which removes business independence. Creeping socialism, with its potential to curb business creation and growth, presents a critical economic issue in this early part of our twenty-first century.
America has rejected complete socialism. In earlier letters, we explained how socialism involves a government takeover of commerce, controlling an industry or a marketplace. Americans have understood the benefits of capitalism well enough to oppose the complete control of typical industries. In other words, we share as initial common ground a knowledge that, when push comes to shove, socialism doesn’t work.
Most Americans have also understood that providing continuous government financial assistance to most citizens is not a good model for government or for people. They know we could never afford ongoing financial aid for everyone. Even if we could, receiving that kind of assistance could harm a person’s ability to grow and achieve their own success.
But what about a few regulations on business and some government assistance for people? What about significantly higher tax rates for someone who earns more money? These items form common ground because almost nobody opposes them, and we have been operating this way for decades in America. Because just about every new law and program sounds good, it has been hard to say “no.”
As it turns out, the Founders’ design for limited government included at least three loopholes. First, in the Constitution, the Founders granted Congress the right to regulate “commerce between the states,” referred to as “interstate commerce.”
Because just about all business activity occurs in interstate commerce, and people have wanted Congress to heavily regulate, Congress did just that.
Second, the Founders included vague language in the Constitution about spending for the “general welfare.” Following the 16th Amendment to the Constitution, enabling taxes on all income, Americans elected various Congresses which taxed at higher levels and spent for just about any purpose.
Third, the Founders placed no limit on government debt. The federal government didn’t even need higher taxes to grow. It could simply spend more by going into debt. The federal government ended up spending about 20% more than it took in, year after year after year.
Courts usually agreed with Congressional regulation, taxation, and spending. This major development meant that a voting majority (who aren’t wealthy) have the power to vote money away from the minority (the wealthy) and re-distribute it to other people, including themselves. Part of America has supported this approach for government.
The Founders very likely never intended this outcome, but the Constitutional door opened to “creeping socialism.” With creeping socialism, a socialist who cannot take over businesses directly can begin to do so indirectly through taxation, spending, and regulation. Each decade we tend to increase taxation, spending, and regulation. As we do, socialism begins to creep.
Frost Brown Todd LLC Member Rob Hudson is a Past Chair of the Northern Kentucky Chamber and a business lawyer. 2018 Independent Author of the Year Lauren Hudson is a Singletary Scholar at the University of Kentucky. Their next letter will explore common ground about liberty, taxes, and spending. At some point, taxation and regulation will amount to complete or near-complete control of commerce. With creeping socialism, the business does not become “Government, Inc.,” but if the government controls prices, operations, products, services, and profits, the business might just as well be owned by the government.
At a time when Great Britain embraced socialism, Prime Minister Winston Churchill objected and famously said, “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent virtue is the equal sharing of misery.”
Modern-day socialists disagree with Mr. Churchill and they believe in government control, often couched in terms of what people can receive as a “right” to something for “free” or at a reduced cost. These individuals, who may see themselves as being compassionate, cannot accomplish their goals without government power over and control of other people’s earnings and activities.
Americans should have an honest debate about boundaries for government. As our common ground, we know government must tax, spend, and regulate. While we may differ on how far to go with these three things, as further common ground, we know that way too much of them can equate to socialism.
America rejected direct socialism and succeeded. We should exercise the good judgment not to creep too far into it.
Constitution and socialism
Is Socialism illegal under the constitution? Where does it say that?
The constitution “is not intended to embody a particular economic theory whether, of paternalism and the organic relation of the citizen to the State or of laissez faire..” Lochner v. New York, 198 U.S. 45, 75 (1905)(Holmes, J., dissenting).
The only thing that the constitution “guarantees ” as a form of government for every state is that it be a “Republican Form of Government.” Article IV, Section 4
As such, capitalism is not mandated in the Constitution. “The Constitution does not require the States to subscribe to any particular economic theory. We are not inclined “to second guess the empirical judgments of lawmakers concerning the utility of legislation,”(internal citation omitted) CTS Corp v. Dynamics Corporation of America, 481 U.S. 69, 92 (1987). Moreover, “As a matter of substantive policy, therefore, government is free to move in any direction, or to change directions, in the economic and commercial sphere. The structure of economic and commercial life is a matter of political compromise, not constitutional principle….” Cleburne v. Cleburne Living Center, Inc., 473 US 432, 471 (1985)
Justice Brandeis in his dissenting opinion in New State Ice Co. v. Liebmann, 285 U.S. 262, (1932), acknowledged the various economic theories by noting: There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs. . . . .[t]o stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. Id at 311.
Moreover, the founding fathers did not write the Constitution with idea of setting forth a particular economic system for this new republic but rather by allowing future generations to develop economic, political and social changes for a more “Perfect Union.”
Justice Holmes in Missouri v. Holland, 252 U.S. 416 (1920), articulated the nature of the Constitution: “With regard to that we may add that when we are dealing with words that also are a constituent act, like the Constitution of the United States, we must realize that they have called into life a being the development of which could not have been foreseen completely by the most gifted of its begetters. It was enough for them to realize or to hope that they had created an organism; it has taken a century and has cost their successors much sweat and blood to prove that they created a nation. The case before us must be considered in the light of our whole experience and not merely in that of what was said a hundred years ago.” Id at 434.
As such, this nation was founded on an idea that we the people can form a more perfect union without being shackled by the old world’s economic, social and political structures.
Thank you so much, Mr. Finch. You lay out a compelling rebuttal. I also find many holes in the Hudson’s case but I certainly could not articulate them as well as you.
I assume Mr. Hudson and Ms. Hudson are opposed to Medicare and Social Security….
What is a socialist? One who hath yearning for equal division of unequal earning. Idler or bungler or thief (s)he is willing to fork over a copper and pocket a shilling.
Should the U.S. government cancel subsidies and any price support activities for the farmers in the Midwest? Should the government be helping those businesses when they can’t survive in a competitive capitalistic market? Of course farmers tend to be conservative and vote Republican, so perhaps a little socialism there is acceptable. Also, it is nice to know that neither of the authors will take Medicare and Social Security when it comes time for them to retire.