Table of Contents
PART 3 — LIBERTY TESTED
Chapter 7
LIBERTY UNLEASHED
Prosperity, Power, and the Big Dogs
The decades after the Civil War combined expanding constitutional Liberty with extraordinary economic transformation. Railroads integrated markets. Telegraph and telephone compressed distance.
Steel, oil, electricity, mechanized production, and new forms of finance changed how Americans lived and worked. Immigration and urbanization accelerated. The period should not be romanticized as a simple Golden Age, but neither should its remarkable expansion of productive capacity be ignored.
Political Liberty distributes political power. Economic Liberty distributes economic decision-making. Both become endangered when power becomes excessively concentrated.
Industrial growth was not centrally planned. Millions of investors, workers, inventors, entrepreneurs, consumers, lenders, and communities made decisions that interacted through markets. The government nevertheless influenced the environment through property law, tariffs, patents, land policy, corporate law, public infrastructure, and other regulations.
Economic Liberty has never meant the absence of law; it means that decentralized voluntary decisions remain the dominant coordinating mechanism unless a legitimate public purpose requires intervention.
Competition is one of the strongest restraints upon private economic power. A business that charges too much, serves customers poorly, or fails to innovate becomes vulnerable to competitors. But what happens when the winner becomes powerful enough to weaken the competition itself—through monopoly, collusion, control of essential infrastructure, political influence, or barriers to entry?
Capitalism’s strength is competition. Its weakness appears when winners become powerful enough to prevent competition. The big dogs can eat the little dogs.
The concentration problem becomes more dangerous when economic power seeks political power. If the government can grant valuable favors or impose costly burdens, businesses and organized interests have strong incentives to influence the officials who control those decisions.
Subsidies, tariffs, licenses, contracts, exemptions, regulations, and tax preferences can all become prizes worth pursuing.
When the government possesses valuable favors to distribute or costly burdens to impose, economic interests have an incentive to organize politically to obtain the favors and avoid the burdens.
Workers also faced real problems: dangerous workplaces, long hours, child labor, unstable employment, weak bargaining power in some markets, and limited protection against injury. Liberty Civics™ should not minimize those conditions merely because private rather than governmental actors were involved. Coercive or concentrated private power can injure Liberty.
The difficult question is what remedy corrects the abuse without unnecessarily creating a public concentration that produces a new problem.
Industrial complexity itself created pressure for centralized solutions. National rail networks, corporations operating across states, and financial systems connected across regions could exceed the practical reach of local institutions. Yet every new concentration of governmental authority created its own accountability problem.
Complexity creates pressure to centralize authority. Every concentration of authority then creates a new accountability problem.
The wrong binary is Big Business or Big Government. Liberty requires WTP to measure both. How do we prevent the big dogs from eating the little dogs without creating a government big dog that can eat everyone?
The Measuring Stick
Is competition functioning? Is private power suppressing entry or coercing others? What remedy directly addresses the abuse? Does the remedy preserve competition or replace it with permanent governmental management? What new power will the government possess afterward?
CHAPTER 8
THE PROGRESSIVE CHALLENGE
When Reform Changes the Purpose of Government
By the late nineteenth and early twentieth centuries, Americans faced real governance problems: patronage, political machines, railroad discrimination, trusts, industrial accidents, public health failures, child labor, financial panics, urban crowding, and corruption.
Reform did not begin suddenly in 1913. The Pendleton Civil Service Reform Act of 1883 moved federal hiring toward merit. The Interstate Commerce Act of 1887 created federal regulation of railroads. The Sherman Antitrust Act of 1890 targeted restraints of trade.
Those reforms raised a larger question: can a governmental system designed in the eighteenth century adequately govern the consequences of an industrial society in the twentieth? The question was legitimate.
But correcting a particular abuse and permanently redefining the government’s responsibility for social and economic outcomes are not the same act.
Correcting an abuse and assuming permanent responsibility
for an outcome are not the same governmental act.
Woodrow Wilson’s 1887 essay The Study of Administration reflected a growing concern with governmental complexity, professional competence, and administration. Expertise could improve knowledge and execution, but expertise did not answer the constitutional question of who should possess decision-making power.
An engineer may know how to build a bridge; that expertise does not, by itself, determine whether the government should build it, where, at whose expense, or under what authority.
Expertise can tell WTP more about the consequences of a choice. Expertise cannot replace WTP’s authority to determine who has the power to make the choice.
Progressive reformers increasingly emphasized governmental capacity. Theodore Roosevelt’s New Nationalism argued that national problems and concentrated national economic power required stronger national supervision and an energetic national government.
The dilemma was real: private power had become national, and the proposed answer was national public power capable of confronting it.
When private power grows, the pressure increases to create governmental power large enough to control it.
WTP must then control the government, powerful enough to control the private power.
Progressivism was not simply socialism, nor did all Progressives agree. The deeper transformation was a shift in governing expectations—from asking primarily what powers the government legitimately possessed to asking what outcomes the government should be responsible for producing.
Herbert Croly’s call for stronger national capacity similarly reflected the belief that national action could pursue democratic and social ends that decentralized institutions could not adequately achieve.
Before assigning government responsibility for an outcome, identify the power the government will require to become responsible for it.
The changing meaning of “nationalism” is itself instructive. Roosevelt used New Nationalism positively to describe greater national governmental capacity. More than a century later, nationalism often carries very different political associations. Modern labels can perform political work before the underlying governing proposal has been examined.
Liberty Civics™ therefore returns to the same discipline: define the claim, identify the proposed governmental power, and examine the facts.
Words change. Principles don’t get that luxury.
A label is not evidence.
The Interstate Commerce Commission illustrates institutional permanence. A real problem produced a permanent administrative capacity. Once an institution exists, the next question is no longer only whether the original abuse deserved correction. WTP must also ask how the institution’s authority evolves, how success is measured, and what happens when the original conditions change.
Progressivism correctly identified an enduring problem: private concentrations of power can threaten Liberty. The Founders had identified another: governmental concentrations of power can threaten Liberty. A free society has to remember both at once.
The Measuring Stick
Does the proposal correct a specific abuse or make the government permanently responsible for an outcome? What expertise is needed? Who retains the authority to decide? What power will be created? How will success be measured? What happens to the power when the problem changes?
CHAPTER 9
THE RATCHET OF GOVERNMENT
When Today’s Solution Becomes Tomorrow’s Inherited Power
Why a Ratchet?
A ratchet is a simple mechanical tool designed to make movement easy in one direction and difficult in the other. Turn the handle one way, and the mechanism advances with a series of clicks. Try to turn it backward, and a locking piece catches the teeth, resisting the return. To move backward, someone must deliberately release or reverse the mechanism.
That makes the ratchet an almost perfect metaphor for government growth. A problem appears. Government acts. New authority is granted. A program or institution is created. Revenue, employees, regulations, procedures, expectations, and constituencies accumulate around it. The next problem begins with the existing machinery already in place. Another click occurs.
Governmental power tends to accumulate one justified decision at a time, while returning that power requires a separate deliberate decision against the interests and expectations that have accumulated around it.
The metaphor does not mean the government can never shrink. A real ratchet has a release, and government does too. Programs can be terminated, agencies abolished, regulations repealed, taxes reduced, and authority returned. The important point is that somebody must deliberately release the ratchet.
Somebody has to deliberately release the ratchet.
The year 1913 provides three different examples of power moving. The Sixteenth Amendment authorized federal income taxation without apportionment among the states. The Seventeenth Amendment shifted the selection of senators from state legislatures to direct popular election.
The Federal Reserve Act created a new national monetary institution. These were different reforms addressing different problems, not a single coordinated scheme. Yet each allows the same Liberty Civics™ question: What happened to power?
The income tax began modestly compared with later rates, but its constitutional significance lay in the authority it created, not in the modesty of its initial use. Revenue is governmental capacity. Greater revenue does not dictate what government must do, but it expands what government can do.
Never measure governmental power by the modesty of its first use. Measure the authority that has actually been created.
Liberty Civics™ can also state a normative taxation principle without pretending the Constitution requires it: if government taxes income, equal Liberty favors applying the same percentage under the same rules rather than having the government assign different citizens different rates because they earned different amounts.
Readers may disagree; the point is to state the principle openly and submit it to the Measuring Stick.
The Seventeenth Amendment strengthened direct popular control over Senate elections while removing the state legislatures’ institutional role in selecting senators. A reform can therefore increase accountability in one relationship while weakening a structural check somewhere else. Power can move even when the institution remains.
A reform can increase Liberty or accountability in one relationship while weakening a safeguard somewhere else.
The Federal Reserve addressed genuine problems of financial panic, liquidity, currency elasticity, and coordination. Its history also illustrates the ratchet.
The original regional structure was more decentralized than the system that later emerged. After serious coordination failures, especially during the Great Depression, reforms centralized important monetary authority in the modern Federal Open Market Committee. The sequence can be read as Problem → Institution → Failure → Additional Authority → Greater Centralization.
Concentrated power creates concentrated consequences.
Is There an Answer to the Federal Reserve?
The useful question is not simply whether the Federal Reserve should exist. A dependable monetary and payments system must still perform essential functions, including maintaining stability and liquidity during genuine banking panics. The Liberty Civics™ question is how much the government must depend on human discretion.
The greater the consequences of a governmental decision, the stronger the presumption should be that the decision is governed by transparent rules, narrow authority, measurable objectives, distributed checks, and defined emergency powers.
Possible arrangements include stricter monetary rules, narrower central bank responsibilities, decentralized mechanisms, competitive mechanisms, or combinations thereof. The remedy should follow principle and evidence rather than begin with a predetermined institutional answer.
The answer to concentrated power is not necessarily the absence of institutions. It is institutions whose power is no greater, no broader, and no more discretionary than the legitimate purpose requires.
The ratchet also operates through constituencies and expectations. Once the government accepts responsibility for a category of problems, citizens and organizations begin making plans around that responsibility.
Benefits are often concentrated among identifiable groups, while costs are dispersed across millions of taxpayers. Political durability can therefore differ significantly from demonstrated success.
Crises accelerate the process because urgency lowers resistance to action. Temporary emergency authority may be justified, but extraordinary power granted for an extraordinary condition should carry an extraordinary burden for becoming ordinary power.
The most revealing measure of the Ratchet of Government may be what the next generation accepts as its starting point.
he original purpose still present? What evidence demonstrates success? What happens when it fails? What makes this governmental power easier to remove tomorrow than it is to create today?
The Measuring Stick
What problem created this power? What authority was granted? What institution, constituency, or expectation now depends upon it? Is t
CHAPTER 10
FROM REFORM TO TRANSFORMATION
The Great Depression, the New Deal, and the Next New Thing
The Great Depression was not an abstract policy debate. Output collapsed, unemployment reached catastrophic levels, banks failed, savings disappeared, and families faced genuine hardship. A serious Liberty Civics™ examination begins with an acknowledgment of the scale of the crisis.
It also acknowledges that Federal Reserve failures and monetary contraction contributed to the severity of the collapse. The existence of a crisis does not determine what the government should do, but it does change the political burden dramatically.
Crisis dramatically lowers political resistance
to governmental action.
The immediate question in a crisis is often, What must we do now? The constitutional and civic question afterward must be: What should remain?
Banking emergency measures, the Emergency Banking Act, deposit insurance, financial regulation, relief, public works, agricultural programs, labor policy, Social Security, and many other New Deal initiatives should not be treated as one undifferentiated program.
Relief, recovery, and reform addressed different purposes and should be measured separately.
Deposit insurance illustrates the chain of consequences. A guarantee can reduce panic and protect depositors, but it also changes incentives, as depositors have less incentive to monitor bank risk. That creates a case for supervision and regulation. Problem → Guarantee → Changed Incentives → Regulation. One intervention can generate a legitimate reason for another.
Government experimentation without measurement can become permanent policy without demonstrated success.
The Depression also changed expectations about responsibility. When individual, family, charitable, local, and state institutions were overwhelmed, federal action became more politically acceptable.
The enduring question was whether emergency federal responsibility would remain temporary or whether economic security itself would become a continuing national responsibility. Social Security answered much of that question by establishing enduring federal roles in old-age benefits, unemployment insurance, and assistance.
Emergency relief had become an enduring governmental responsibility.
Permanent programs then alter private behavior. People plan retirement around expected benefits. Employers and financial institutions adapt. States build systems around federal funds.
Removing the program later can impose costs created partly by the program’s own existence. That is the Expectation Ratchet.
Federalism can also change through money. Federal Revenue → Federal Grant → State Participation → Institutional Dependence → Continuing Federal Influence. States may formally retain authority while federal funding increasingly shapes the choices available to them.
Did the New Deal end the Depression? A serious answer is more complicated than a slogan. The economy recovered substantially after 1933, banking stability improved, and relief and infrastructure programs had important effects.
Yet full employment and full productive mobilization arrived only with World War II. The severe 1937–38 downturn also demonstrates how fiscal and monetary policies themselves can become major variables when the government is deeply involved in economic management.
Once the government becomes a major participant in an economic system, government policy itself becomes part of the system’s risk.
The New Deal also transformed constitutional expectations. Court doctrine became more accepting of broad federal economic regulation, and the political confrontation over the Supreme Court demonstrated how institutional limits themselves can become part of the struggle over policy.
Transformation need not occur through the abolition of constitutional institutions. It can occur through accumulated responsibilities and changed interpretations of existing power.
The Next New Thing
The New Deal was followed by the Fair Deal, the New Frontier, the Great Society, and later New Federalism. These programs arose in different circumstances and should be judged separately.
Yet the sequence raises an important question: if each governing program solved the underlying problem, why did each subsequent generation repeatedly need a new thing?
Circumstances genuinely change. Technology changes. Population changes. New problems appear. Innovation is not the enemy of Liberty. The error is assuming that a newly named governmental program escapes enduring realities of scarcity, incentives, human nature, concentrated power, and unintended consequences.
The government can create a new program. It cannot create new Laws of Nature.
The political debate can gradually shift from whether the government should bear responsibility for an outcome to how it should administer the responsibility it has already assumed. The next administration may criticize the previous program while accepting its underlying governmental starting point.
Perhaps the most revealing measure of a governmental program is not what the next administration abolishes, but what it accepts as its starting point.
New ideas should be welcomed. New claims of exemption from old realities should not. The name changes. The Laws of Nature do not.
The Measuring Stick
When the government offers the next new thing, ask: What problem is new? What Law of Nature has changed? What responsibility is being transferred? What power follows? What inherited program is being accepted as the starting point? How will WTP know whether the new program worked?
CHAPTER 11
WHEN FACTIONS CONTROL THE MACHINERY
When Winning Government Becomes
More Important Than Limiting It
Madison recognized that faction is inevitable. Washington warned that faction can become machinery. Those two insights converge when organized political coalitions compete to control a government whose accumulated powers reach deeply into economic and social life.
The problem is not that citizens organize. Association is part of Liberty. The problem emerges when thousands of interests learn that the most effective way to advance their goals is to capture the same increasingly powerful governmental machinery.
America’s two-party structure bundles countless interests into two enormous national coalitions. Each coalition contains people who disagree internally on many questions but cooperate because elections force choices among a limited number of viable candidates.
This can moderate politics by requiring broad coalitions, but it can also compress complex governing judgments into a binary contest and make control of government the overriding objective.
As governmental power increases, the incentive to capture governmental power increases with it.
The cycle becomes self-reinforcing. More governmental power creates a larger prize. A larger prize makes factions stronger. Stronger factions make elections more consequential. More consequential elections increase fear of losing.
Fear of losing makes winners more willing to use governmental power while they possess it. That use increases the importance of capturing the next election.
This is why the opening proposition of this book matters so much: if our Liberty depends upon our candidate winning, we have already surrendered too much Liberty to government. The problem is not solved by making sure our faction wins forever. No faction wins forever.
A principle that limits only our opponents is not a governing principle. It is a political weapon.
The temptation reverses with power. Out of office, political actors appreciate limits. In the office, the same limits can appear obstructive. Executive discretion condemned under one president becomes necessary under another.
Federalism is celebrated when a state resists an opposing administration, but becomes an obstruction when a different state resists ours. Fiscal discipline can disappear when spending serves our preferred constituency. The opponent test exposes the inconsistency.
Party labels also become substitutes for measuring governance. Representatives are described as members of teams, and citizens infer large bundles of positions from a single letter beside a name. Yet results remain stubbornly nonpartisan. Debt carries interest regardless of the party that incurred it.
A failed program does not become successful because our faction passed it. A successful reform does not become a failure because the other faction proposed it.
Results are stubbornly nonpartisan.
Political labels can also do work before evidence is examined. Progressive, conservative, socialist, nationalist, extremist, moderate, establishment, populist, and countless other terms can become shortcuts that prevent the underlying claim from being defined.
Liberty Civics™ uses a stricter rule: a label is not evidence. Define the claim, establish the facts, identify the power being sought, and measure the result.
Government and faction can create a feedback loop: Government Power → Political Constituency → Factional Organization → Electoral Pressure → Additional Government Power.
Organized groups naturally defend benefits, regulations, contracts, protections, or powers that matter intensely to them. The cost may be spread among millions of citizens who have little incentive to organize around any one item.
You cannot permanently solve faction by renaming the factions. You have to examine the power they are fighting to control.
The objective is not universal agreement or even bipartisanship. Agreement can be wise or foolish. The opposite of faction is not agreement. It is a principle. A principled citizen can disagree strongly while applying the same standard to allies and opponents.
That is the discipline required if WTP are to control the machinery rather than merely fight over who operates it.
The opposite of faction is not agreement. It is principles.
The central question is therefore not whether parties should exist. It is whether the constitutional system controls the effects of factions or factions increasingly control the constitutional system.
Parties are tools. WTP remain the source of delegated authority. The more powerful the machinery becomes, the more important it is that WTP possess a Measuring Stick independent of the factions seeking to operate it.
The Measuring Stick
What principle is at issue? What power is being sought? Is it constitutionally legitimate and actually necessary? Where should it reside? What incentives will it create? What results followed? Would I accept the same power in the hands of the opposing faction? Is this representative more accountable to WTP—or to the faction necessary to keep the representative in power?