Marketplace of Ideas Blog

With Independence Day, my favorite federal holiday, this week, U.S. Rep. Michael Turner (R–Ohio) thinks the U.S. Constitution needs more freedom added to it.

Specifically, Turner is introducing a Preserving Capitalism in America Constitutional Amendment (H.J. Res. 57, for those of you familiar with Thomas.gov), which would ban much of what the Obama Administration has been doing — exchanging government aid for stock in publicly traded companies:

The United States shall not own, subscribe to, or otherwise have any interest in the stock or equity of any company, association or corporation: Provided, That the foregoing prohibition shall not apply to any public authority or to any public use corporation, or to any investments through any pension funds.

“The Obama Administration is exercising an unprecedented amount of control over private industry,” said Turner. “They have fired CEOs, set compensation levels for private sector employees, and are taking control over the domestic auto industry. The Administration’s increasing influence on private industry raises serious concerns about federal ownership of private enterprise. This amendment addresses this issue by limiting the amount of ownership that the Federal Government may exercise over private enterprise.”

Independent of the fact that in a Democratic-controlled Congress this legislation has as much chance of passage (let alone get approval of the legislatures of 38 states) as my chance of starting at quarterback for the Packers this season, this is only a partial solution. We can all agree that government ownership of stock is not a good thing (arguably even in what the amendment would allow — pension fund investments for government employees), but this amendment does nothing about the government’s power to tax or regulate, which has been going on far longer than the government’s owning shares of General Motors.

For more effective protection of our economic rights than either Congress or the state Legislature, they of the $2.1 billion tax increase, we should turn to a proposal of Nobel Prize-winning economist Milton Friedman and his wife Rose, an Economic Bill of Rights: “the equivalent of the First Amendment to limit government power in the economic and social area — an economic Bill of Rights to complement and reinforce the original Bill of Rights …”

The Friedmans’ Free to Choose suggested that an Economic Bill of Rights should include:

• A ban on duties on imports or exports beyond what is needed to fund inspections.
• A ban on wage and price controls: “Congress shall make no laws abridging the sellers of goods or labor to price their products or services.”
• A ban on states’ enacting “any law which shall abridge the right of any citizen of the United States to follow any occupation or profession of his choice.” That, of course, was aimed right at occupational licensing, which, given one’s perspective, is either a seal of approval for one’s work in the eyes of potential clients, or a way to keep out competition in one’s field.
• A free trade amendment (which was proposed to replace the first three) based on the Second Amendment: “The right of the people to buy and sell legitimate goods and services at mutually acceptable terms shall not be infringed by Congress or any of the States.”
• The replacement of the 16th Amendment with an amendment to collect taxes on incomes “provided that the same tax rate is applied to all income in excess of occupational and business expenses and a personal allowance of a fixed amount. The word ‘person’ shall exclude corporations and other artificial persons.”
• A sound money amendment limiting increases in the money supply to between 3 and 5 percent per year.

Free to Choose also includes a 1979 constitutional amendment proposal to limit growth in federal spending to the annual growth in gross domestic product, with the added proviso that government spending would be required to be reduced if inflation exceeded 3 percent. The proposal also required surplus funds to be used to reduce the federal debt. It also required the feds to “not require, directly or indirectly, that States or local governments engage in additional or expanded activities without compensation equal to the necessary additional costs.” (Unfunded mandates begone!)

These rights are negative rights, in that the Bill of Rights protects, and an Economic Bill of Rights should protect, us from government actions, whether it’s unlawful search and seizure or excessive taxation. Both are infringements upon our freedom. And, as has been noted before, while we have choices of which businesses to patronize or not, we have no such choice in which governments “serve” us, short of moving away.

Those who pay attention to such things may note at this point that the Wisconsin Constitution has almost no taxpayer or free enterprise protection in it. Thanks to the feckless Republicans of the mid-2000s, the state Constitution has no spending or taxation limits, other than a limit of 20 cents per $1,000 assessed valuation on the state forestry tax and the requirement that “the rule of taxation shall be uniform,” except for several exceptions such as progressive income taxes. The state Constitution does have a protection against private property being taken for public use against the owner’s consent, unless done “in the manner prescribed by the Legislature,” and it includes municipal debt limits. Other than that, as we’ve seen, the Legislature can spend, tax and regulate all it wants unfettered by anything other than the likelihood of getting re-elected.

Rights, of course, are too precious and too important to be left to the vagaries of majority rule, either at the federal level or the state level. (As someone once put it, a majority of people could vote to imprison a minority of people, and that would be perfectly democratic.) Protection of minority rights was the rationale for the Bill of Rights. As all the emerging capitalist democracies are demonstrating, economic freedom and political freedom are inseparable.

An Economic Bill of Rights of the correct kind (as opposed to this kind) won’t happen with the current majority in Congress and the party in the White House, but someday more business-friendly elected officials may get to Washington. (And, for that matter, Madison.) When that happens, permanent protections of our economic rights need to be added to the permanent protections of our political rights.