Thursday, August 19, 2010

How to Change the System

The Founders did not trust democracy. Many of them noted that no democracy in history has lasted. A democracy becomes mob rule sooner or later. So the Founders attempted to encase democracy in a Republic. It set up separation of powers ala Montesque, and it created a constitution that was supposed to ensure small government. But, a few of the Founders like Hamilton and Madison wanted strong federal government, as they stated in the Federalist Papers. Madison, while otensibly a small government person, argued for phrases in the Constitution such as the Welfare Clause and the Commerce clause, expectingg that these would provide the flexibility necessary for federal government to become more powerful.

We are now at the point the Federal Government is way too powerful; the Courts have allowed it to use the Commerce Clause to regulate anything and everything and used the Welfare Clause to mean anything deemed to be in the public interest can be done or provided by the federal government. The Congress is corrupt, the Executive Branch is corrupt,and the courts have no idea what the Constitution means. How can the original intention of the Constitution be captured again?

The Founders wanted a Congress composed of citizen-farmers, people who would leave their occupation temporarily to serve the country and then return quickly to their occupation. What we have now is a permanent class of politicians. Perhaps term limits would move in the right direction. What are the economics of term limits? Limits would stop the Charles Rangel, Maxine Walters type behavior based on the thought that the Congress people are privileged and can do what they want. But, would it create a moral hazard problem? What would it mean for the behavior of a Congressman in his last term? Since he would not need to appeal to voters, would his behavior change?

In business it has been found that the more a person's compensation can be linked to performance, the more productive is the person. Can we establish such a relationship with Congress? What would we want Congress to do -- what is its objective? It shouldn't be passing laws since that creates more problems. Perhaps we could require that a Congressman pays out of his own money, for any bill he introduces. This would incentivize them to not introduce bills. Perhaps we could offer Congressmen options that would be "in-the-money" only if the economy performed well over a period of time nd only if a panel of experts or a board of voters determined that nothing the Congressmen did reduced liberty. Perhaps they would learn that the economy works best when left alone.

We could probably figure out a way to incentivize Congress to do what we want -- the problem being what "we" want is often impossible becase some want the opposite of others. So, any suggestions on how the problem can be solved?