This is part 5 of a 6-part article.
Read Part 1 Here
Read Part 2 Here
Read Part 3 Here
Read Part 4 Here
Anti-Federalist Prediction #6: The Treaty Power Will Be Abused
Prediction: The treaty power will be used to change the Constitution in ways the people don’t even know about and that benefit the rich at the cost of the people’s freedom.
This has happened and still does. In fact, it may soon be a major concern.
For example, when banks fold and endanger entire nations, government can bail them out. The same is true for huge businesses and even state-level governments.
But what happens when nations fail financially?
The old answer was that they became open to attack like Western Europe during the Great Depression. The result was devastating.
To prevent such a disaster from being repeated, the Allies met in 1944 and crafted the Bretton Woods organizations, including the International Monetary Fund (IMF) and the World Bank.
Since then, nations who couldn’t pay their debts have been bailed out by the IMF.
In return for such benefits, the borrowing nation submits to “Austerity Measures,” under which the IMF closely watches national policy and government institutions to ensure that the nation does nothing to jeopardize its ability to pay back its loans.
This system has certainly had its share of successes.
But Austerity also amounts to a virtual transfer of sovereignty from national government to IMF regulators—well beyond the power of the citizenry to require accountability or to effect remedies.
So far the United States and most Western European nations have been lenders to the IMF, not debtors.
But if the U.S. ever needed to become a debtor nation, Austerity Measures would prove the anti-Federalist prediction devastatingly true.
For example, when Greece defaulted on its debt payments in early 2010 and Spain threatened to do the same, the European Union came to the rescue.
The IMF was called in to advise the EU, and Austerity was established over the Greek government.
Many citizens (including a huge number of professionals and managers) took to the streets in protest.
But instead of protesting a drastic loss of freedom to Austerity, they were upset because of wage freezes.
There are three ways the U.S. can avoid Austerity at some point in the future.
First, we can tighten our belts, reduce government expenditures, and deregulate and lower taxes on small businesses, which historically make up 80 percent of our economy’s growth.
This would convince many employers to hire and consumers to spend.
Second, we could borrow from other nations. China has a huge surplus of government and also private savings, and it wants to invest in the United States. Indeed it is our largest creditor now.
Other nations may also be persuaded to keep supporting our spending habits. But one has to wonder why our philosophical opponent (communist China) wants to invest so much.
Are its motives pure? What if they’re not? Is it a simple profit motive? What if it’s something more?
As Peggy Noonan wrote in The Wall Street Journal:
“People are freshly aware of the real-world implications of a $1.6 trillion deficit, of a $14 trillion debt. It will rob American of its economic power, and eventually even of its ability to defend itself. Militaries cost money. And if other countries own our debt, don’t they in some new way own us? If China holds enough of your paper, does it also own some of your foreign policy? Do we want to find out?”
A third possible method of solving our debt problem is to borrow from huge international corporations. This carries the same problems as borrowing from nations.
Note that if we do eventually take IMF loans, they will only pay the interest on the debts. We will have to pay back the original loans, and an international team of regulators will run our national economic policy and make our economic decisions.
If Americans are frustrated with Congress, imagine their frustration with a group of international bank officials running our economy—bankers who may not have as their motive either to see us out of debt to them or to strengthen our economy, society, international influence, or other elements of our way of life.
The rule of international borrowing is simple: The lenders make the rules.
Method one of facing our economic reality—returning to an incentivizing free enterprise system and living within our means—is hard.
Neither political party wants to promote it, and whoever does implement it will probably be blamed for higher short-term unemployment, stock market losses, and a worsened recession.
In the long term, however, this course will revitalize America’s economy and free lifestyle.
The other two options keep America in economic decline and will eventually result in reduced political power, weaker national security, and fallen status.
They will also, most importantly, lead to a significant decrease in our freedoms and the prosperity of our children and grandchildren.
This is our choice: Make the tough decisions now, or lose freedoms and prosperity for generations. So far we have passed on making the right choice.
No wonder independents, tea partyists, and the far left are so frustrated with both Republicans and Democrats.
Moreover, economic downturns are three-headed dragons; and to this point we have only faced recession and high unemployment.
Inflation is likely to be the next crisis, and it may very well rekindle and worsen the first two.
Whatever we decide to do economically, we should, like the Federalists and anti-Federalists, clearly understand one thing: Economics and freedom are directly linked.
A debtor nation is less free than when it was solvent.
To be continued…
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Oliver DeMille is the founder and former president of George Wythe University, a co-founder of the Center for Social Leadership, and a co-creator of TJEd Online.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
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