Photo above: The Hertford Bridge in Oxford, England. Used by Permission. © Tom Ley 01302 782837

Wednesday, November 11, 2009

Our Prosperity and Posterity by James A. Davids

Life in post-Revolution America was rough and bears some semblance to today. The new nation was deeply in debt because of governmental spending, and foreign lenders refused to accept our paper money, insisting instead on gold. When debtors could not pay their loans, the banks started a wave of foreclosures in Massachusetts, took possession of farms and homes, and jailed debtors. Hundreds of people coalesced around Daniel Shays, a Revolutionary War veteran, who led his “army” in shutting down courts to stop foreclosures and then freeing imprisoned debtors. Neither the national or state government was willing or able to respond, so a group of Bostonians paid for an armed militia to go to western Massachusetts, reopen the courts, and defeat and arrest Shays and his army. Within a few months of this incident, the Constitutional Convention began in Philadelphia.

Shays’ Rebellion must have been on the mind of those gathered in Philadelphia during the summer of 1787, since the Preamble states that the Constitution’s purposes include “to insure domestic Tranquility,” and to “secure the Blessings of Liberty to ourselves and our Posterity . . .” These “Blessings of Liberty” included personal and economic freedom so Americans and their posterity could pursue “happiness” (the acquisition of property), which was identified as an “unalienable” right in the Declaration of Independence eleven years previously.

Regarding securing economic freedom for their posterity, the Founding Generation and their immediate successors unlike today paid off their national debt. Primarily because of the Revolutionary War, the national debt in 1791 stood at $75 million. This debt grew but by 1835, America was debt free. The Civil War caused the national debt to climb for the first time into the billions ($2.7 billion after the war), but this debt stayed rather stable until World War I pushed the national debt to $22 billion. The debt was paid down in the 1920s to $16 billion, until the social spending of the New Deal and World War II exploded the debt 1600% to an amount equal to the value of all goods and services produced in the U.S. in one year. With the rapid expansion of the economy after World War II, the percentage of debt to GDP fell while the debt increased primarily due to inflation. The debt passed $1 trillion in 1982, doubled to $2 trillion in 1986, and then added another trillion dollars in debt in 1990, 1992, 1996, 2002, 2004, 2006, 2007, and 2008. This raging appetite for debt continues. The Congressional Budget Office in March estimated that the current $10 trillion debt would double in ten years based on President Obama’s budget.

Although the Cold War, Vietnam and Iraq Wars, and other overseas ventures have consumed considerable resources, we have not had a world war for 60 years. Rather, our continuing huge budget deficits and resulting mountains of debt are attributable to expensive social programs passed largely by Democrats (who failed to raise taxes to cover the new expenses) and tax cuts passed largely by Republicans (who failed to cut spending). In other words, for the past 25 years our leaders have borrowed money so we could spend it on ourselves either for retirement benefits, prescription drugs, health care for the elderly, or simply more consumer spending – a continuing legacy of the “Me Generation.” The debt, and the burgeoning interest on the debt, we leave to our children and grandchildren.

By adding “…and our posterity” to the Constitution’s Preamble, the Founders placed upon themselves and all subsequent generations (certainly including us) a profound moral duty which we have sorely neglected. Such neglect is reason enough for the rise of future Daniel Shays. Whereas the Founders in gaining independence sacrificed their prosperity for their posterity, we have sacrificed our posterity for our prosperity.

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