America’s constitution isn’t found on paper

To resolve fiscal or societal issues in the United States, the last place you want to start is the U.S. Constitution. It tells us very little if anything about how political and economic power are generated, allocated, or used.  A better public policy approach requires that you understand the real constitution of the United States and then be honest as to what government’s current role is in this constitution and modifying that role so as to make government more effective.

As written, the U.S. Constitution does not describe or mandate a particular economic rule for the production and allocation of output.  This is probably a good thing in that it gives American society flexibility in how best to structure its economy given existing constraints and resources. On the other hand, the lack of guidance on how the American economy should be structured provides the prevailing economic narrative to remain unchallenged the longer it remains in place.

As a political document while the U.S. Constitution describes the structure of American government, the duties and powers of its executive, legislative, and judicial branches, and how the populace participates in the selection of the representatives to the government, the document gives no guidance on how the political mechanism is expected to help allocate economic output.

The U.S. Constitution is not a going forward document. It’s a cautionary document written mostly to prevent tyrannical treatment of the masses, at least on the surface, the best evidence of this contained in its bill of rights.  Conservatives celebrate its caution and relish in arguing its precedence and dominance in all of society’s decisions, from funding social security to providing health care to balancing the United States’ federal budget.  It’s why conservatives are usually calling for amendments to this piece of paper hoping that such an act takes care of today’s fiscal and societal problems.

The real constitution of the United States, however, is found in the makeup of its population.  What I’m arguing is nothing new per se so here is my take on America’s “constitution.  The United States can be broken down into three classes.

First, there is a political elite made up of your usual suspects: elected officials, administrative agency heads, and advocates.  The political elite control public rights-of-way; bridges; roads; harbors; airports; and the coining of currency.  They use political mechanisms, i.e., the election process, litigation, administrative agency rules; legislation to allocate access to capital.

Second, there is a commercial elite.  This group is made up of the private owners of factors of production (capitalists) and the entities that underwrite them (equity and bond holders).  They control access to financial capital; regulate commerce via contractual agreements; and conduct the day-to-day operations of America’s markets otherwise known as the economy.

Finally, there is the general citizen class or the “me and everybody else” class.  This group serves the constitution in two ways.  First, it pays the taxes that are used to underwrite the economic infrastructure upon which the commercial class sells its goods and services.  Second, the “me and everybody else” class consumes the goods and services produced by the commercial elite.

In an economy where 70% of it is driven by consumption, the “me and everybody else” class plays a very important role.   It subsidizes the two prongs of America’s effective constitution, paying for political packages with its taxes and paying for goods and services with its disposable income.  Yet when it comes to ownership of the capital and other resources that make the American economy exceptional, it has very little in residual income or equity.

Class divisions are found in most societies and the United States is no exception. Class divisions may not appear inherently fair since greater benefits flow upward to a smaller number of people on the food chain, but can a government run by a political elite that uses particular tools to balance society via an inequitable flow of capital and resources, be the appropriate entity for bringing about equity?

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Economy, government, Political Economy and tagged , , , , . Bookmark the permalink.

One Response to America’s constitution isn’t found on paper

  1. kenski2013 says:

    Alton: very thoughtful analysis.

    “Class divisions may not appear inherently fair since greater benefits flow upward to a smaller number of people on the food chain, but can a government run by a political elite that uses particular tools to balance society via an inequitable flow of capital and resources, be the appropriate entity for bringing about equity?”

    I’m interested in hearing your definition of “equity” in this context.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s