Wealth Redistribution Part Three: The Original American Model

Aristotle warned, “If the majority distributes among itself the things of the minority, it is evident that it will destroy the city.”

The founders shared this view as well, which is democracy is inherently “incompatible with personal security and the rights of property.” What the founders understood is that taxes could become a weapon for one group of people to prey upon another group. This is why the constitution limited the government to indirect taxes such as tariffs, duties, and excise taxes. Today’s income tax is none of these, in fact the income tax is a new classification of taxes altogether that falls out side the constitutional definition of what and who can be taxed. (More on this later)

Jefferson (and the other Founders) opposed confiscating wealth and reallocating of property by government. Thomas Jefferson wrote in a letter, April 1816, “To take from one, because it is thought that his own industry and that of his father’s has acquired too much, in order to spare others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association — the guarantee to every one of his industry and the fruits acquired by it.”

The framers made sure the constitution was very strong on property rights—what belongs to you is yours. If someone tries to take it from you, you can stop him yourself or call the sheriff. Our founders understood that in democracies the majority can take property from the minority so the framers of the constitution put in safeguards so this wouldn’t happen.

The Bill of Rights is a document that specifically protects individual liberties—it doesn’t grant rights, it protects them, and it doesn’t protect the rights of the collective. In other words the “Bill of Rights” offers no class of people or special interest group any special rights. That is why we are a constitutional republic—ruled by law not by majority opinion.

Another thing our founders understood very well was the importance of property rights as an integral component of individual liberty. In fact property rights are the only means of implementing one’s rights. This is the private ownership of land, livestock, the income one earns, etc, etc. And they also understood the fact that incentive, creativity, and productivity is more often propagated by reward and dignity is a product of self-achievement.

So they created a nation of opportunity but not one of guarantee. In America anyone, regardless of gender, race, or financial status, can succeed if they are willing to get an education, have a strong work ethic, and exercise good judgment in the choices they make. Although opportunity exists for everyone there can be no guarantee of prosperity without violating someone’s rights.

I think the principles of American economic philosophy are best described in G Edward Griffin’s book “The Fearful Master”:

1. Economic security for all is impossible without widespread abundance.
2. Abundance is impossible without industrious and efficient production.
3. Such production is impossible without energetic, willing and eager labor.
4. This is impossible without incentive.
5. Of all forms of incentive—the freedom to attain a reward for one’s labors is the most sustaining for most people. Sometimes called profit motive, it is simply the right to plan and to earn and enjoy the fruits of your labor.
6. This profit motive diminishes as government controls, regulations and taxes increase to deny the fruits of success to those who produce.
7. Therefore any attempt through governmental intervention to redistribute the material rewards of labor can only result in the eventual destruction of the productive base of society, without which real abundance and security for more than the ruling elite is quite impossible.

Suffice it to say in order to preserve the rights of people the founders favored measures to encourage free-market solutions for the natural distribution of wealth rather than by government mandate. The American economic method is capitalism and capitalism is the only economic system that fully supports individual rights.