Max R. P. Grossmann

Max R. P. Grossmann

On the evolution of ideas in constitutional rules

Posted: 2024-02-18 · Last updated: 2024-02-27

The American and French revolutions brought with them a plethora of ideas on the relationship between the people and their government. These ideas for constitutional design are necessarily a product of time and circumstance. While the U.S. first continued running under the Articles of Confederation, a new Constitution was brought in on March 4, 1789—the Bill of Rights followed on December 15, 1791.

The point of this post is to show that knowledge about governmental overreach is generated only over time. We should not expect constitutions to remain constants. Is it not surprising then, that since the U.S. Bill of Rights in 1791, there have been only three new ideas on the constitutional–institutional level?

The American Congress quickly realized that under the boundaries of the Constitution, its powers were limited. So did the executive branch. Nonetheless, there was no enforcement mechanism for the Constitution. The Constitution established the Supreme Court, but it did not give it the authority to resolve conflicts arising from violations of the Constitution. In 1801, President John Adams used his constitutional powers to appoint judges. The Senate approved these appointments. When Adams left the presidency just a few days later, new President Thomas Jefferson refused to install the appointees, in contradiction of the Constitution.

Such a situation was evidently not envisioned by the Framers. Together came the Supreme Court and invented from whole cloth the idea that the U.S. Supreme Court has the power to enforce the Constitution. Chief Justice Marshall wrote: “The Government of the United States has been emphatically termed a government of laws, and not of men. It will certainly cease to deserve this high appellation if the laws furnish no remedy for the violation of a vested legal right.” And so it was done.

The idea that the legislative branch is empowered to void unconstitutional laws has survived. It has decisively shaped not just American law, but the entire trajectory of Western jurisprudence. The German constitution—among many others—have now adopted this rule as black letter law. All this happened despite it not originating from the Constitution, rather from what could be called a conspiracy by John Marshall and others. And thank God for this conspiracy.

Many years later, Hitler's judicial system was handing out death sentences willy-nilly. Some even retroactively! This was on top of all the other Nazi atrocities such as the Holocaust. A fundamental problem arose after the World War. If we are to decide whether any given death sentence was appropriate, it is necessary to reevaluate the entire case. Needless to say, most of them were evidently unjust. But what does it mean if the punishment of death is unjust if the positive law proscribes it as an absolute? If the judge had no choice but to impose the death sentence, and the law was correctly applied, then the analysis must go to the law. Is it just? This can be difficult to do. More importantly, any such analysis is irrelevant: The final nature of capital punishment makes it impossible to undo executions. This tilts the balance against justice if justice is understood as a process.

A liberal consensus emerged after the second half of the 20th century. If the state is banned from executing people, the application of the law will get much less risky. It was by then understood that governments can become tyrannical—and, even when not tyrannical, can make mistakes. The emergence of totalitarian governments in the 20th century along with heightened respect for individual rights then led to the abolition of the death penalty in many countries.

Americans should not pooh-pooh this advance. Few people before the second half of the 20th century had ever doubted the right of the government to destroy the life of a citizen convicted by the law. The abolition of capital punishment represents a radical curtailment of the government's power, on par with the abolition of taxation. The fact that many innocents were executed under the guise of the law provided the sorry knowledge necessary for this idea to be implemented.

Future Nobel Prize-winning economist James M. Buchanan sat in a café in Italy when the scales fell from his eyes. Suddenly, he understood why we don't owe government debt “to ourselves” and why it does indeed encumber future generations.

Politicians have an incentive to come across as nice, handing out bonbons left and right. But these bonbons have to come from somewhere. Government has three main ways to finance its operations: (i) by taxing, (ii) by taking on debt and (iii) by printing money. Options (i) and (iii) are highly unpopular—much dissatisfaction is caused by (i) a loss in income or (iii) price inflation. But option (ii) shifts the burden to our children and grandchildren. We don't pay anything. But we get the bonbons. And we vote, while future generations don't. So that's what politicans will want to do.

If indeed we owe the money to ourselves, then this does not represent a problem. But Buchanan understood both the perverse incentives faced by politicans as well as the fact that future taxpayers will have to pay up in a real sense. This resulted in many legendary academic articles by Buchanan. He later proposed a balanced budget amendment to the Constitution.

While that idea failed, Buchanan's insights survived. Beautifully, every politician can understand that other politicians will face these incentives—spurring reform. While there is no balanced budget amendment, both the U.S. and Germany (as well as many other countries) now have some form of debt limit or debt ceiling that restricts the political economy of endless debt financing of government. The chickens will come home to roost. Debt limits are financing rules that force politicians to face up to this fact.

Why did the U.S. Constitution not come up with a debt limit from the start? Simple. Here, too, the Framers simply could not have imagined that debt financing of government expenditures would become such a “thing.” In the olden days, debt had much more uncertainty attached to it. Hence, the U.S. Constitution included a provision that the government cannot repudiate debt, to encourage people to lend money to it. But at the time, the government was much smaller. Never would the Framers have imagined that government would pay welfare, social security and so much else. Clearly, it is unattractive to have these bonbons financed by taxes. But they could not have imagined the endless stream of bonbons to come. The growth of government and the increased lending to governments were jointly necessary to create the modern pathology of seemingly boundless government indebtedness.

Besides these three ideas, there have been some other monumental changes: The abolition of slavery, women's suffrage, the introduction of income taxes. Nonetheless, these changes did not fundamentally reshape the role of government.

Why, then, have there been only three fundamental structural changes in government since the American and French revolutions? Change is impossible without the understanding of a pathology. Politicians act within an institution that has heavily profited from technological advances. Those advances have made governance much easier and increased the scale and intensity of governmental intervention. Today, we can only smile about the complaints the early Americans had about George III.

The history of constitutional reform is the history of institutional realignment, whether through conspiracy (Marbury v. Madison), international elite consensus (capital punishment) or profound economic analysis (debt limit). Government will not disappear, but its powers can be redirected and curtailed by the meta-level of constitutional boundaries. In observing the day-to-day functioning of government, we should seek to observe the pathologies and perverse incentives faced by politicians and attempt to address them. For that, we need ideas and the courage to call out dysfunction.