THE AMERICAN EXPERIMENT - 250 YEARS ON
The Declaration of Independence - by John Trumbull, 1819
A Humble Beginning
Following several failed attempts, the first permanent English settlers arrived on the northeast bank of the James River in 1607. The site was then known as James Fort and is now known as Jamestown, Virginia. The motivations for these people to give up their homes, jobs, neighbors, and comforts to eke out an existence in an unknown, undeveloped, foreign land were many, including: the promise of vast cheap land, economic opportunity, religious and political freedoms.
Only 60 of the 214 settlers survived the bitter winter of 1609-1610, known as the "Starving Time". But by 1612 West Indies tobacco was being successfully grown, leading to an economic boom for the colony. That location served for the first of many legislative assemblies in the "New World" - new to the settlers but well known to the indigenous Paspahegh people. Over the following years, the settlers suffered many hardships including Bacon's Rebellion in 1676 when rebels burned the capital to the ground over disputes about high taxes, lack of protection from Native American raids and falling tobacco prices.
The town was rebuilt but by 1699 most people moved to Williamsburg. For the next seventy-five years thousands of additional settlers arrived along America's East Coast. The British government encouraged this immigration because it expanded England's growing empire and provided new sources of tariffs and tax revenues.
Due to the great distance between England and the colonies, for generations the latter were largely left to their own devices. They were governed by a mix of authorities: "provincial" (under royal governors), "proprietary" (managed by individuals) and "charter" (under corporate rule). Over time and especially following the French and Indian War (1754-1763) England expanded its control over the colonies and imposed higher royal taxes and increased the regulation of colonial commerce. This created growing friction between the colonists and the British government.
This resentment eventually led to the drafting and adoption on July 4, 1776 of a Declaration of Independence - the 250th anniversary of which was recently celebrated in the US. The painting above was commissioned in 1817, purchased in 1819 and eventually installed in the United States Capitol rotunda in 1826. It depicts 42 of the 56 signers. The signing of the Declaration did not form a new government. It simply announced the colonies' secession from English rule and their assumption of the status of "free and independent states". Several of its recitals are noteworthy.
"Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government..."
"When a long Train of Abuses and Usurpations...evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security."
The "long train of abuses" committed by King George, through his colonial governors, included:
"He has erected a Multitude of new Offices, and sent hither Swarms of Officers to harass our people, and eat out their Substance."
Not all colonists supported the call for independence and remained loyal to the British government. But the die was cast and the Revolutionary War soon followed. The colonies drafted their own state constitutions and united loosely under Articles of Confederation - a temporary assembly of delegates appointed by the states to discuss what was to come next. After winning the war and gaining independence from England, the thirteen states set about debating the terms of a new national Constitution.
There was disagreement about the terms of the proposed government with one group favoring a weak central government (the Anti-Federalists) and the other wanting a stronger central government (the Federalists). The Constitution that was adopted is something of a compromise. It set forth a government of three branches, each with its own special authority, together with checks and balances on the others. The two houses of Congress were established in material part to draft legislation. However, that legislation must be signed by the President before it becomes law. However, the President's "veto power" could be overridden by a Congressional vote of two-thirds margin. The President is the commander in chief of the army and navy, has the power to appoint judges with Senate confirmation, and the duty to enforce the laws passed by Congress. The federal court system has the duty to interpret the national laws to ensure they comport with the terms and limitations of the Constitution and then to apply them to parties who come before it with their disputes. The states retained their own executives, legislators and court systems to deal with all other matters.
Due to concerns about too much power being given to Congress, its remit was limited to what is now known as its "enumerated powers" found in Article 1, Section 8. These include the power to lay and collect taxes, provide for the defense of the nation, regulate interstate commerce, establish a post office, promote the progress of science and the arts by issuing patents and copyrights, declare war, and raise an army and navy.
To limit the powers of the nascent national government, many states insisted on the inclusion of a declaration of rights to protect the people from national government overreach. These were set out in the Bill of Rights (the first ten amendments to the Constitution) and included the right to bear arms, free speech and religion, freedom from unreasonable searches and seizures, and the right to trial by an impartial jury. Significantly, the 10th amendment declares that all powers not specifically delegated to the federal government nor prohibited to the states by the Constitution "are reserved to the States respectively, or to the people." This was to ensure that the states would continue to exercise the lion's share of governmental power as they had up to that point.
The Growth of the US Government
Joseph Solis-Mullen, in a Mises article, describes what he sees as the evolution of the American "Republic". The first Republic followed the signing of the Declaration and consisted of a decentralized confederation of states working together under Articles of Confederation. The signing of the Constitution initiated the second Republic. It set out a limited federal government with narrow enumerated powers coupled with the recognition of substantial state autonomy.
The Civil War brought the third Republic where it was established that once a state joined the union, it was powerless to withdraw, and any attempt to do so would be considered a rebellion and met with lethal force. Thus, the union of states became a Roach Motel - "You can check in but you can't check out". The states became subservient to the national government as the colonies had been to England.
The Progressive era was the fourth Republic. It fundamentally altered the relationship between the people and their government. It saw the creation of the Federal Reserve Bank, many federal agencies given rule making power to regulate commerce and much more, the creation of a national income tax, federal efforts to manage the economy, the welfare state, social regulations, and Franklin D. Roosevelt's successful threat to "pack the Supreme Court" with his supporters unless that Court blessed his progressive - many argued unconstitutional - agenda. The Court capitulated leading to an ever expanding exercise of powers by the national government.
The fifth Republic followed the September 11, 2001 attacks. That led to the creation of a vast surveillance state, the normalization of military interventions around the world and the vast expansion of governance of the people by an unelected and largely unaccountable administrative state. Since then, major government power has been assumed by the President acting through Executive Orders and statutes granting him the power to act in ill-defined "emergencies". The role of Congress, the people's representatives, has thereby been greatly diminished and it has increasingly been proven incompetent in fulfilling its constitutional duties. It routinely fails to meet its most basic functions. For example, it has not managed to pass all 12 individual regular appropriation bills, on time, since 1996 and appears to be powerless to enforce the terms of the War Powers Act passed to limit the President's power to engage in undeclared foreign wars.
Today's Leviathan State
The US national government has ballooned to its current size of 2.3 million civilian employees. What do they all do? The Federal Register lists between 257 and 441 federal agencies and sub-agencies, depending on one's definition of the term. There are an additional 2 million active duty and reserve military personnel. That adds up to a direct national government payroll of 4.3 million people. Taxpayers also indirectly support millions of private employees who produce goods and services for the government ranging from B-1 bombers, Naval frigates and ballistic missiles to desk chairs and paper clips.
Congress is constantly passing and amending statutory laws that are set out in the "United States Code". It now spans some 60,000 pages, divided into 54 broad categories. Some of these laws are exceedingly long, for example: the 2021 Consolidated Appropriations Act is 5,593 pages; Affordable Care Act of 2010, 2,500 pages; Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 1,800 pages. What is the likelihood that any member of Congress scrutinized these proposed laws in full before voting in favor of them? Much of their language was drafted by lobbyists representing outside entities and special interest groups pressing their own agendas.
Congressionally created government agencies issue their own "rules and regulations" that are contained in the "Code of Federal Regulations" totaling some 190,000 pages in over 200 volumes touching on almost every aspect of the people's lives. These laws and regulations subject the people to injunctions, fines and imprisonment for their violation. What is the likelihood that any citizen is aware of this thicket of laws, rules and regulations?
The government has also nationalized private enterprises such as Amtrak by acquiring all of its preferred stock and has recently taken direct ownership interests in the common stock of numerous private corporations (e.g., 10% of Intel, and lesser amounts of MP Materials, Lithium Americas, Trilogy Metals, USA Rare Earth, and several quantum and tech firms) ostensibly on "national security" grounds. It has also taken a "golden share" in US Steel granting it permanent veto power over its corporate decisions. Whether all of this is a blessing (protecting the nation's security) or a curse (the first step on the slippery slope to government control of the "means of production" - communism) is the subject of growing debate.
In order to gain votes and get elected to Congress, politicians of both major political parties routinely lead voters to believe that the federal government is a vast cornucopia that can supply endless benefits and services to them - at someone else's expense. This has led to the US government's $40 trillion public debt that forces it to borrow roughly $155 billion every month to keep the system from imploding. The crushing interest cost of this debt now exceeds $23 billion a week. That sum will surge as the debt continuously increases and interest rates rise. This is clearly unsustainable recalling the dictum, "that which cannot go on will stop".
Some people are very concerned about the path being taken. Mark Thornton writes,
The conceptual baseline of politics has fundamentally shifted from ancient ideals of communal justice that emerged with the successful genesis of society into a clinical, transactional exercise in power maximization. Governance is not a pursuit of justice, but a system of calculated ruthlessness, strategic tradeoffs, and the continuous expansion of institutional power and individual prestige.
Sociologist C. Wright Mills famously identified this phenomenon in his 1956 work The Power Elite, arguing that the critical decisions of modern states are concentrated within an interlocking directorate of political, military, and corporate leaders. Consequently, ordinary voters find themselves functionally alienated, possessing virtually no influence over final policy outcomes and at odds with their fellow citizens.
Elites systematically bypass the public will by “buying” elections and politicians through immense campaign contributions, dark money networks, and legalized bribery. This dynamic was significantly amplified by the US Supreme Court’s 2010 Citizens United v. FEC decision, which allowed unlimited independent political expenditures by corporations and unions.
This helps to explain the growing disparity of wealth, power and opportunities in the nation and many peoples' conclusion that the game is rigged against them and in favor of the governing elite. Charles Hughes Smith shares this belief.
[W]hen the sacrifices and costs far exceed the rewards, people drop out and that decay of effort, sacrifice and commitment dooms the civilization. When pressured by increased competition for resources and status, the social order breaks down as the stress manifests both in individuals who become passive or hyper-aggressive and in group dynamics that disrupt the social order. The Romans - when the status quo failed to serve the interests of its commoner populace: they opted out, abandoning their devotion to maintaining the status quo because it no longer served their interests to toil ceaselessly to pay taxes, fight endless wars, etc. for a dwindling share of the empire’s output.
[This dropping out happens when], 1) costs rise faster than the purchasing power of wages, slowly impoverishing and immiserating wage earners; 2) the elites have aggregated so much power that they siphon off the lion’s share of the economy’s gains, leaving less to be distributed to the majority. 3) The elites use their power not just to siphon off most of the gains (in our era, gains from capital) but to distribute the risks, losses and costs to the bottom 90%, in effect moating themselves off from the consequences of the neofeudal society passing itself off as a free-market democracy. Power is concentrated in the top state-private sector classes. No one below has any real power. Electing another leader or party changes nothing.
Is it really as bad as that? Politicians are quick to point out that ordinary workers today enjoy immense benefits of modern life that would have been unimaginable to past Kings and nobles, such as electricity, heated and air-conditioned homes, running water and sewer systems, vastly improved health care, stupendous variety and availability of food, modern transportation, etc. And that is undeniably true.
However, it is also clear that the nation is growing ever more divided financially, socially and politically. There is increasing resentment among the working classes that they pay income, sales, real estate and endless other taxes to support the "non-working classes" - those receiving government housing, food, health and social security benefits (which may be unavailable to them when they retire) - while the elites enrich themselves from their favorable dealings with the government. Workers may or may not read financial journals but they daily suffer the increasing stress of trying to make ends meet. This chart shows the rise of consumer prices (blue line) and the ever-declining purchasing power of the dollars that they earn (red line).
Source: Federal Reserve Bank of St. Louis
Note that this government calculation of consumer prices (the blue line) is based on the so-called "16% Trimmed Mean CPI". What is that? Government statisticians at the Cleveland Federal Reserve Bank make up a list of various consumer items. (They choose what items to include in the calculation.) They then eliminate the largest price rises in 8% of goods and services and declines in the bottom 8%. The stated purpose of doing this is to eliminate "volatile" prices changes. However, if the top 8% of consumer prices are going up an average of 10% and the bottom 8% are going down 3%, then the people are being seriously misled about the level of "real" consumer prices. Statistics can be useful to understand large data sets but clever selectivity in the data used is useful to misrepresent the true facts. Special interest groups, including governments, excel at doing this.
Financially, the working classes continue to lose out to the financial elite at a rapidly growing pace. This chart reports on the startling growth of wealth amassed by the top 0.1% of US Household (blue line) versus the bottom 50% of households (red line) between 1989 to 2026.
The surge came after the FED opened the money spigot following the 2008 housing crisis – the already rich were favored with low borrowing costs causing surging asset prices – thus the Fed created the massive wealth disparity that will eventually lead to civil unrest as the bottom 50% break under the pressure to meet their rapidly rising monthly costs.
The typical MAGA HAT (or US voter for that matter) doesn’t have the discretionary assets to play in the Fed’s casino—since most of the modest net worth of the bottom 50% of US families is accounted for by equity in their homes and other household assets. Accordingly, the conversion of Wall Street into a gambling casino has mainly benefited the top 1-5% of US households, which hold upwards of 90% of tradable stocks, bonds and derivatives.
The next chart reports on (government calculated) inflation-adjusted median US wage growth from June 2023 to May 2026. This data understates the "real" rate of price inflation, so it understates the growing problem for wage earners. It would be hard to present a clearer picture of what might "eventually lead to civil unrest."
Source: David Stockman
History repeatedly shows that when workers continue to suffer assaults on their freedoms and standards of living due to high taxes and the government's debasement of their wages through inflation of the money supply, they find appeal in a demagog who, if granted great power, promises to save them from their misery. Examples include the French Revolution (1789), the Haitian Revolution (1791-1804), the Russian Revolution (1917) and the Chinese Revolution in (1949). Such revolutions often lead to even greater tyranny (the French "Reign of Terror" and the rise of Joseph Stalin and Mao Zedong, both of whom inflicted millions of deaths on their populations). There is an urgent need to put an end to the fiscal madness and political/crony-elite duopoly that infects and is bankrupting both the US - and likely your nation. A simmering pot can unexpectedly boil over.
