Wednesday, March 5, 2014

Would the Founders Really Support Bill Maher's Call for a "Maximum Wage"?---PART 1


In his hateful diatribe against the rich, which was the subject of my last post, Bill Maher called for legal caps on earnings, in the form of a "maximum wage" law. To support his case, Maher drew on the Founding Fathers to justify his call for such laws:

That is not a new idea. James Madison, who wrote our Constitution, said, "Government should prevent an immoderate accumulation of riches." Washington, Jefferson, Hamilton, they all agreed that too much money in the hands of too few would destroy democracy.

Would the Founders actually support such a thing?

Maher linked Madison's quote to a Newsweek article by David Cay Johnston. So that there is no misunderstanding, let me state up front that Johnston's article is an intellectually thoughtful piece, in direct contrast to Maher's emotionalism. Johnston doesn't rail against the rich. His focus is not to tear down the economic top, but to lift up the bottom. He doesn't call for limits on earnings. The title of Johnston's article is "Why Thomas Jefferson Favored Profit Sharing." 

While I don't necessarily agree with Johnston's political suggestions—among other things, Johnston places no blame for the wide wealth disparity he documents on government's monetary policies (which fosters artificial inflationary gains for the rich) or on the regulatory welfare state (which stymies upward mobility of the ambitious poor)—I don't want what follows to imply that I think Johnston is in the same grungy emotionalist camp as Maher. Johnston promotes government policies that "encourage" stock ownership or some other form of profit sharing for workers as a means to reduce wealth inequality. While I don't agree with Johnston's government interventionism, note that while Maher trashes capitalists, Johnston promotes a vision of "an America in which every worker is a capitalist." 

That said, since Maher uses Johnston, implying that Johnston and the Founding Fathers support Maher's ideas, I must cite Johnston's material to refute Maher.

First, one must understand the context of the time in which the Founders lived. Remember that the colonies had just thrown off the yoke of monarchistic Britain, which was ruled by a political aristocracy whose riches were literally taken out of the hides of the masses (called subjects). In creating the new American nation, the Founders were greatly influenced by the history of mankind, where the usual path to riches was by legalized theft. It was this unjust form of wealth inequality, effectively concretized and dramatized in the movie Robin Hood, that they abhorred. The true Robin Hood legend is of a man who took back from the looting rulers in order to return that property to its rightful owners. (John Ridpath contrasts the Robin Hood myth with the real Robin Hood.)

It was this repugnant history of the wealthy that was real to the Founders. The great American capitalist system—a system that would emerge under the principle that every individual had an unalienable right life, liberty, and the pursuit of happiness, which included strong protections for property rights—had not yet come into being. The Founders had no knowledge of the great productive geniuses that would eventually flourish under that system, creating fortunes by productive, primarily intellectual, work rather than theft, and in the process economically lifting rather than looting the masses (now called citizens). They had only history and its thieving ruling elite as a frame of reference, and that's what they feared.

As we shall see below, it was not so much wealth that the Founders feared. Many were themselves wealthy. It was political power wielded by the wealthy—a state of affairs that could not arise under laissez-faire capitalism, because capitalism, properly understood, separates economics and state. (The Founders did not completely separate economics from state, which led to the crippling mixed economy we have now.) Maher draws on the Founding Fathers to back up his call to denigrate the rich and limit earnings. He quotes James Madison as saying, "Government should prevent an immoderate accumulation of riches." But that's very misleading because that's not exactly what Madison said. From the actual Newsweek article by Johnston that Maher references:

James Madison, the Constitution's main author, described inequality as an evil, saying government should prevent "an immoderate, and especially unmerited, accumulation of riches." He favored "the silent operation of laws which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigents towards a state of comfort."

The rights of property means the rights of use and disposal, including trading one's work product—which is property—for money. Where in the constitution is government granted the power to limit production and trade; i.e., what anyone can earn? Indeed, Madison thought the way to prevent "unmerited" accumulation is through "political equality," not government-enforced economic equality. Johnston's quote was lifted from writings in which Madison focused on the political virtues of "republicanism". From the same paragraph, Madison urged a political system that "abstain[ed] from measures which operate differently on different interests, and particularly such as favor one interest, at the expence of another."  

On the same page, Madison argues forcefully for a government based on a division of governmental powers, to restrain the power of individual political factions. "In all political societies, different interests and different parties arise out of the nature of things." The solution to preventing the domination of one or a few  of these "natural parties" over others is in "making one party a check on another." It "is not less absurd," Madison wrote, to "establish kings, and nobles, and plebeians," which he called "artificial parties," to check the power of these natural parties "than it would be in ethics, to say, that new vices ought to be promoted [to] counteract . . . existing vices."

This sounds like a strong statement against the arbitrary power of the regulatory agencies of the modern mixed economy welfare state. Does this sound like a Madison that would support minimum and maximum wage laws—or, he might say in today's terminology, pay czars? (Johnston, remember, does not claim that Madison would. It is Maher who dishonestly makes this inference.) 


Related Reading:

Hank Reardon Answers Bill Maher's Call for a "Maximum Wage" Law
The Left’s Egalitarian Trap (and Why Republicans Must Not Step In)

Obama's Corrupt "Equality" Campaign and the 99/1 Premise

The Truth About Robin Hood

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