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The Modern Constitution Empowers Redistribution, the Original One Not So Much

Ganesh Sitaraman has written an oped in the New York Times arguing that our Constitution was not built for a society as unequal as our has become.  Even leaving aside the claim that our society is becoming substantially more unequal—one I have contested, the essay is mistaken.   First, the Constitution as amended today empowers the federal government to engage in regulatory redistribution and progressive taxation to reduce economic inequality.   Second, the Constitution of 1789 on which Professor Sitaraman principally focuses was consciously built to protect against legislative attempts to mandate more equality. The populist demagogues with whom the Framers were mainly concerned were those who would bamboozle the populous into debtor relief legislation and other wealth destroying schemes that could be sold, just as in our day, as aids to poor and retribution to the rich.   Sitaraman misunderstands both our contemporary Constitution and our original Constitution.

After the 16th amendment and the New Deal Court’s interpretation of the Commerce Clause, the federal government has plenary powers of income taxation and regulation. There is nothing to prevent the left wing of the Democratic party from making our income tax code even more progressive than it already is. (It is already one of the most progressive of OECD countries.) Nor is there anything preventing them from spending more of our money on their latest social engineering schemes. Only a vote of the House and the Senate and the signature of the President stands between us and government control of the health system through enactment of single payer.

Sitaraman nowhere acknowledges these vast federal powers–powers that have been used for redistribution again and again in the last hundred years.  He claims that the system thwarts a more egalitarian society because of such matters as our campaign finance system where rich people and corporations (like the New York Times, for instance) have the constitutional right to spend money to make their opinions heard. But most for-profit corporations spend little on political campaigns and there are many rich people, like Tom Steyer and George Soros, who fund the progressive agenda. If a left-wing Democrat gets the 2020 nomination, as is likely,  she will certainly be able to make the case for her economic program and, if she has a sufficiently left-wing Congress, enact that program.

One of the odd aspects of the essay is that Sitaraman contrasts our era with the late nineteenth century, where the levels of inequality were as great (his view) or substantially greater (my view) than our own. And at that time there was no federal income tax nor a federal administrative state. And yet according to his own reckoning, progressives were able to attack the evils of entrenched inequality, despite having a much harder hill to climb.

But nothing is as perplexing as his failure to discuss the most famous Federalist Paper, No. 10,  where James Madison, the Father of the Constitution, provided the most important analysis of economic inequality in our founding era documents. Did Madison make the assumption for our constitutional design that that wealth was or would remain relatively equal? Not at all. In fact, he stated clearly that the “first object of government” is to “protect the “diverse faculties” of men, including “the unequal faculties of acquiring property.”

Not surprisingly in order to protect those faculties the government Madison midwifed had substantial restraints against redistributive schemes–something Sitaraman also fails to mention. I have already noted that the federal government at the time lacked the powers of income taxation and plenary economic regulation that it now has. The Constitution prevented  the states from “impairing the obligation of contracts” to prohibit debtor relief schemes. While the states did have many other economic powers, these were restrained because they were in competition with one another for capital and people.  In short, the Constitution of 1789 was inimical to burdening economic liberty and thus constrained reducing  the inequality that the exercise of liberty may bring.  Sitaraman cannot be permitted to make the Constitution of 1789 part of a progressive campaign narrative.

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