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The American Revolution inaugurated the first government in the world that was based on the principle that sovereignty and rights are in the people and not in the king or the ruling class. It is sometimes said that while European countries located sovereignty in “divine right,” America located sovereignty in “the consent of the governed.” But this is not correct. Consider Jefferson’s famous proclamation, in the Declaration, that “all men are created equal and endowed by their Creator with certain unalienable rights.” Notice that Jefferson—who was a man of the Enlightenment, and by no means an orthodox Christian—nevertheless locates the source of equality and rights in a single source: the Creator. Why does he not locate the doctrine of equality in the people, in the consent of the governed? Because never have “all men” or all people ever given their consent to such a proposition. Moreover, even if they did, all people don’t become equal—any more than they become tall or intelligent or morally good—by mutual or common agreement!

What Jefferson means is that all people are equal in having a shared human nature. Being human, they are of equal moral value in the eyes of their Creator. And it is because of this equality that legitimate government derives its authority to rule from the consent of the governed. Far from denying divine right, Jefferson appeals to it. In the American case, however, God sanctions a system in which sovereignty or ultimate authority derives not from the king but from the people. Royal sovereignty under God gives way to common
sovereignty under God. America establishes the first government in history that is based on “We the people.”

This is a momentous change. Instead of rights and privileges flowing “down” from the king to the people, they now flow “up” from the people to the government. In the old case the king granted limited authority and power to the people; in America, the people grant limited authority and power to their rulers. Elsewhere, the people are subjects and thus subjected to the laws, possessing rights only at the behest of the government. In America, there are no subjects, only citizens. Citizens are subject only to laws that they themselves make through their elected representatives. The representatives possess this power at the behest of the people, and they must obey the same laws as the rest of the people.

So the government that controls the people is, through majority rule, selected by the people. But who controls the government? The American answer to this question is: the Constitution. Once again, the American solution can be contrasted with English practice. England has no written constitution; instead, English law is based on a common law that has evolved over the centuries. The American Founders, however, adopted a Constitution which is a “higher law,” a law that trumps even majority rule. Why is such a law necessary? When governments are given power through a democratic process, why do they need to be restricted and over-ridden by a higher law? The reason is that the American Founders recognized the limits of majority rule.

It may seem odd, in a democracy, that there should be any limits on majority rule. The reason for the limits is that the people as a whole have created the government, and the government must rule on behalf of the whole people. In the American context, of course, there are complications with the concept of the “whole people.” The states, not the people directly, approved the Constitution. And even
today, in presidential elections, the people choose their leader through the states. (“The state of Virginia goes for Barack Obama.”) Even so, the point remains that government gets its moral legitimacy from the whole people, and in a sense, the only fully legitimate government is one that rules by consensus: the people decide as a whole. The problem is that, in practice, consensus is nearly impossible to achieve. So majority rule is the next best substitute. Still, majority rule must be set up in such a way that the majority rules on behalf of the whole. Madison writes that “the will of the majority” must be a “plenary substitute” for “the will of the whole society.”
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Another way to put it is that the majority must not use its power to trample on minority rights. The Founders were very concerned about this. What if the majority decides, for instance, to confiscate the property of the minority? The Founders insisted that “tyranny of the majority” is just as dangerous as having a one-man tyrant. In some ways, it’s more dangerous. It’s bad enough to be oppressed by one man—even worse to be oppressed by the bulk of your fellow citizens. In
Notes on Virginia
Jefferson declared that “an elective despotism was not the government we fought for.”
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Consequently the American Founders implemented multiple mechanisms for limiting the power of the central government—even an elected government—and for ensuring that this government did not become oppressive to all or even some of its citizens. The Constitution is a charter for limited government. Basically it says that the federal government can do this, this, and this. And beyond this, the federal government has no power to act. When Thomas Jefferson and later James Madison proposed that a Bill of Rights be added to the Constitution, Alexander Hamilton objected. In
Federalist
No. 84, Hamilton said enumerating such rights was “not only unnecessary” but could “even be dangerous.” He asked, “Why declare that things shall not be done which there is no power to do?” He added, “Why,
for instance should it be said that the liberty of the press shall not be restrained, when no power is given by which restrictions may be imposed?” Hamilton was concerned that specifying a list of restraints on federal power might encourage the government to claim unwarranted authority in areas where no specific restraints were listed.
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But others wanted it in writing that government could not abridge certain fundamental rights, and so the Bill of Rights was adopted in the form of amendments to the Constitution.

In addition to limiting the size and power of the federal government, the Founders divided power between the federal government on the one hand, and states and local governments on the other. This principle is called “federalism.” They also divided the federal government between a legislature, executive, and judiciary, which we know as a “separation of powers” and they instituted a system of “checks and balances” giving different branches of government (say the House and the Senate, or the president and the Congress, or Congress and the courts) authority to exercise competing authority on the same issue. This is a way of blocking schemes that don’t enjoy broad support from going through.

In
Federalist
No. 51, Madison gave the underlying rationale for all this. Governments become oppressive, he writes, because of the infirmity in human nature. “If angels were to govern men, neither external nor internal controls on government would be necessary.” But this is not the case: in place of angels, we have people like George W. Bush and Barack Obama. Such people have their own agenda; competing agendas form what Madison terms “factions.” Each faction is likely to try and usurp the whole government and promote its own program. Consequently, factions must be thwarted, not by abolishing them, but by setting them against each other. “Ambition must be made to counteract ambition,” Madison writes. This amounts to a “policy of supplying, by opposite and rival interests,
the defect of better motives.” This way the only projects that get approved are ones that serve the public good. The whole objective is to ensure that “the private interest of every individual may be a sentinel over the public rights.”
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I mention all this because many of these carefully devised safeguards have been brazenly ignored in recent decades, with presidents and the federal government usurping authority reserved to the states, ignoring the Constitution when it limits the scope of governmental action, getting into wars without proper congressional authority, politicizing the courts, and so on. These offenses have been committed by Democrats and Republicans, progressives and conservatives, although the most flagrant violations are by Democrats and progressives who increasingly don’t even pretend to feel inhibited by the Constitution. As a result, we now have a Leviathan state, far from the limited government the Founders envisioned. The government that was set up to protect our rights has in many cases become a danger to our rights. I will say more about this in a later chapter.

If one unique principle of the American founding was the idea that all men are created equal and endowed with unalienable rights, a second unique principle is the creation of a free market society with business as the national vocation and the innovator and entrepreneur as the embodiments of the American dream. Marx understood this. Writing in the mid-nineteenth century, he termed the United States “the most modern example of bourgeois society.”
10
Yet America’s commercial emphasis may seem unfamiliar to many today, because progressives have been attempting to redirect the energy of the American people—especially young people—away from the private commercial sector toward the government sector. When I first came to the United States in the late 1970s, the tone had been set by John F. Kennedy. Kennedy said to Americans: If you are
young, if you are idealistic, then do what? Join the Peace Corps! Become a public servant. For JFK, there were nobler things to do with your life than work for a profit-making corporation. If you did that, you were a greedy, selfish guy. But if you became a bureaucrat, or went on a Peace Corps mission and lived in a hut in Africa, you were a morally wonderful person. We hear the same thing from Obama, who routinely tells young people in his graduation speeches: don’t go for the brass ring, the corner office, the big promotion.
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Presumably, he wants Americans to become community organizers or union bosses or go to work for the federal government. In the progressive lexicon, “business” is a term of derision and becoming a political activist or a federal bureaucrat is what the American dream is all about.

Not for the Founders. The Founders knew that, historically, in most cultures, business and trade were reviled. For nearly two millennia, across the world, the merchant and entrepreneur have been regarded as low-life scum. Confucius says, “The virtuous man knows what is noble. The low man knows what is profitable.” In Japan, the social hierarchy placed the imperial family and the lords at the top, the warriors or samurai below them, then the farmers and artisans, and finally the merchants lowest of all. In the Indian caste system, the top rung is occupied by the priest, the next rung by the nobility, the next by the warriors, and down the list we go, until one step from the bottom, just above the hated untouchable, we find the merchant and the trader. Historian Ibn Khaldun, one of the great Islamic thinkers of the Middle Ages, has an essay arguing that looting is a morally preferable way to trade to acquire wealth. Why? Because trade is based on exploitation of the needs of others and is therefore base and shameful. Looting, by contrast, is courageous and manly, since you have to defeat a rival in open combat and take his stuff.
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Even today in Europe, it’s better to have inherited money than
earned money. Inherited money is seen as innocent, like manna dropping from heaven, while earned money is seen as the result of some sort of exploitation.

The American Founders were well aware of this social hierarchy, and they inverted it. In a sense, they turned the whole totem pole upside down, so that in their new regime, the bottom-runged entrepreneur would now come to the top. The Founders began by rejecting the premise that undergirded property rights in England. Under English law, all property was owned by the king. Historian Forrest McDonald points out that according to English common law “every legitimate title to real property derived ultimately from a grant by the king.” This same principle extended to the liberty to contract for work and keep the fruits of one’s labor. That liberty too, McDonald notes, was considered a grant from the Crown.
13
While America’s property and contract law was originally based on English law, the American Revolution changed all that. In the
novus ordo seclorum
, people would have a natural right—a God-given right—to their own property and to the benefits of their own labor and creativity. The Founders ensured the protection of this right in two ways.

First, the new regime set about to encourage new inventions and technology, which are the driving force of entrepreneurial capitalism. Capitalism is not merely a system for motivating work or distributing rewards in proportion to value created; it is also a system for creating new wealth, and there is no more obvious way to do that than through inventions and technology. The original Constitution—before the addition of the Bill of Rights—only mentions a single right, the right to patents and copyrights. Article 1, Section 8 of the Constitution gives Congress the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” America may be the only country in the world to give
patents and copyrights constitutional status. Commenting on this provision, Abraham Lincoln—himself a patent holder—said that the Founders sought to add “the fuel of interest to the fire of genius in the discovery and production of new and useful things.”
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A second way the Founders sought to advance commerce and entrepreneurship is by encouraging a system of “natural liberty” in which people can buy and sell what they want, and work where they want, rising as far as their skills and talents take them. In other words, the Founders set up a market meritocracy. The twelfth book of
The Federalist
states that the new government in America has been set up to enable the efforts of “the assiduous merchant, the laborious husbandman, the active mechanic, and the industrious manufacturer” to “vivify and invigorate all the channels of industry and make them flow with greater activity and copiousness.” Similarly Madison says in
Federalist
No. 10 that “the first object of government” is the “protection of different and unequal faculties of acquiring property.”
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Note that this is the primary goal of the new regime. Inequality of outcomes is not seen as a necessary evil that government should seek to remedy; rather, the government itself exists to guard citizens’ right to accumulate unequal fortunes and property.

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