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Overcoming the Agency Costs of Representative Government, Part 2

By Kyle Roberts

This is Part 2 of a two-part series. Read Part 1 here.

The Power of the States

Large-scale republics do not allow the people to effectively monitor their elected officials. The more people there are, the more issues follow. When issues increase it is harder for the people to create a stable majority to fight special interests.

Accurate information is harder to acquire the more the ratio of elected to appointed officials favors appointed officials, and the more appointed officials the harder it is for the people to obtain access to the government itself.

Large-scale republics also are prone to have large electoral districts that tend to be dominated by big, organized money.

Since it is impossible for one representative to accurately represent all the interests in his district, the voices heard the most are the loudest — and the loudest voices tend to be backed by big money.

All these elements lead toward a bureaucratic state.

Opponents concluded that in order to control capital, power should be devolved to a government with small electoral districts which are largely governed by people who canvas door to door through labor rather than through money. (This is a major difference between national elections and local elections.)

To avoid bureaucratic management and big money domination, simply reduce the amount of power lodged in the hands of the central government to bare necessities. Then devolve power away to localities where the ratio of elected to appointed officials favored those who were elected.

Getting power to the country, (country party ideology) or to the people at large (the growing western provinces in America) was their method of breaking the violence of factions.

It removed the causes by devolving power away from financial and policy experts (Hamilton, Morris, Bittle, Greenspan, Bernanke, Gheitner, etc.) to independent entities who were legally a part of, but through sovereignty they were independent within the system.

In America those independent entities were states.

The Declaration of Independence made the several states as sovereign and independent as France, Spain, or England were at the time. They were STATES in the legal sense of the word.

But the Civil War quashed the country party ideology and turned federalism into something it was never intended to be.

Federalism Today

Today’s model of federalism has a very different form and purpose. What we see as federalism is more managerial decentralization. The end goal is to make the subunits (states) as efficient as possible in maximizing profits.

It is essentially the corporate model applied to government.

The states are not seen as sovereign political entities within a broader legal framework based in the Constitution. Instead, they are as arms of the parent company which has 50 different sub-corporations competing against each other to bring in more profits to headquarters.

The states end up taking orders from headquarters; money for R&D, infrastructure, training, and security; permission to act in certain outlined capacities; are granted limited amounts of managerial level innovation; and transfer most of the profits generated to fund the general programs of the parent company’s agenda and to pay off their underwriters.

This model is based on centralizing power, controlling the effects of factions by minimizing the amount of factions that can compete, dispersing the majority of interest groups across the nation and consolidating the important few interests at the center place of government.

All the fears of the country party theorists and original true federalists exist in America today. Yet they only exist because the true principles of federalism have been turned on their head.

True Federalism Built America and Helped Keep It Free

Had the states maintained their original status as sovereign entities and all the principles associated with a dispersion of power remained intact (i.e. no central banks, strict construction of the Constitution, concurrent review, 10th amendment philosophy, etc.), then there would have been no way for a nationalist agenda to take over.

This original philosophy of federalism – or country party ideology – formed the basis of good government for numerous founders and their successors: Thomas Jefferson, St. George Tucker, John Dickinson, John Taylor, John Calhoun, and even Robert E. Lee.

Here is Jefferson in a letter to Joseph Cabell:

“No, my friend, the way to have good and safe government, is not to trust it all to one, but to divide it among the many, distributing to every one exactly the functions he is competent to.

“Let the national government be entrusted with the defence of the nation, and its foreign and federal relations; the State governments with the civil rights, laws, police administration of what concerns the State generally; the counties with the local concerns of the counties, and each ward direct the interests within itself.

“It is by dividing and subdividing these republics from the great national one down…until the administration of every man’s farm by himself; by placing under every one what his own eye may superintend, that all will be done for the best.”

This whole philosophy has been flipped on its head; power has been consolidated.

Instead of original federalism we have a decentralized managerial corporatocracy.

Does Original Federalism Still Have Merit Today?

Country party ideology and original federalism have more relevance today than ever before.

Power must be devolved away from the center place of government, away from the technocrats and policy experts, away from big money that can exercise undue influence on elected officials, away from courts that possess significant power over the law.

Power must go back to the country, or back to every man and his own farm, as Jefferson said.

If there is less to do for elected officials who are sent back then there is less potential for an unjust exercise of power. There is also less potential damage that can be done through bribes by financial elites.

The Constitution must be interpreted according to the standard rules of construction for any legal document in the founding era.

It is not original intent that matters but original understanding, which is the meaning given to the Constitution and its various clauses by the debates in the ratifying conventions.

They were the makers of the Constitution; it was they who gave it legal force by ratifying it under the specifications obtained in the debates.

Central banks and centrist monetary systems were the largest concerns of those promoting country party ideology. They presented the greatest threat to local and long-term freedom. The same is true today.

Conclusion

The destructive force of factions can be overcome by removing the causes that allow any single interest group to exercise undue influence on the government or its representatives.

One major cause of undue influence is consolidated power in the center place of government. By devolving power away from the center place and leaving it in the hands of those who it rightly belongs to, the potential for intrigue significantly falls.

The ratio of elected to appointed officials will tend to favor the elected officials and thus the people and their rights.

Bureaucracy will be mitigated because the people will have a rightfully larger share of power and will have a substantially higher capacity to maintain control over their elected officials.

Though the capital class will still command a large portion of the nations capital, the producer class will be the dominant economic class.

When the wealth of the producer class is not stripped from them by a public debt and central monetary system, they will be the most powerful force behind driving the economy. This arrangement naturally retains power out in the country away from centralized government.

Technology cannot have an adverse effect on this model. Rather, it supports it by giving the producer class the ability to keep a closer eye on their representatives and check any abuse of power. This is especially true since the potential powers to abuse at the national level will be few.

Thus overcoming the agency costs of representative republics and their tendency toward consolidation and bureaucracy can be found in the original federal principles. It is country party ideology that advocates limited and enumerated powers and strict construction of the constitution.

It is this philosophy that launched America into the greatest growth of enterprise, industry, innovation, and amelioration of the human condition ever recorded.

It can be resurrected. It simply requires the same conviction, education, sacrifice, and determination as those who championed it during the birth of this great country.

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Kyle Roberts is a small business owner who has committed his life to the cause of freedom. He is dedicated to recreating strong local self-government in his community by creating, and helping others create, institutions that create and preserve freedom.

He teaches a four-part lecture series on the Original Understanding of the Constitution for free to the community.

Kyle and his wife Kim own and operate Prudent Living Food Storage. They live in Spanish Fork, Utah with their two children.

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Overcoming the Agency Costs of Representative Government, Part 2