Food for Thought, João Barata

It took me some time to devise how to begin this article, since I hold its subject in great esteem. First, I thought I would start it in the usual way these things are often handled, in the lines of “at the end of the XVIII century…” or perhaps giving some motivation as to why the subject is important to our present and our future, but this would only spell instant boredom to the reader and, quite frankly, to me. I then realized that even if one is stating fact there is nothing that bars one from a certain poetic license.

In a cold morning, some centuries ago, the citizens of Boston awoke from their beds alarmed by their greatest fear. They put on their wigs, their shorts and their pointy hats and came out to see British soldiers disembarking in their port. Due to the recent unrest in the colony of Massachusetts, General Thomas Gage was sent to end resistance against the taxes imposed by Parliament, which was approaching intolerable levels. Thus, the citizens of Boston were forced to house British officers and soldiers in their homes as they set out in their mission of keeping the peace. The first man killed in the American Revolutionary War was among those who disembarked on that day. His death marked the beginning of a bloody war that would last until nine

From the death of war does our story begin, dear reader. The story of the establishment of a Federal authority. In the words of John Adams, leading man in the American Independence, “How few of the human race have ever had an opportunity of choosing a system of government for themselves and their children.” The History we have learned suggests there existed a certain inevitability in the creation of the United States and the establishment of a federal central government. This is very far from the truth and is the true subject of this article.

By the end of the war, every state in the new country had its own constitution and militia. There was no central authority save for congress, which had no power to levy taxes, being thus powerless. The Union was beginning to break away as each state began threatening its neighbours militarily for economic and territorial reasons. There were barely any roads linking the country and the only common element between the thirteen peoples was their British heritage.

In the past, the army of George Washington and their common foe had been uniting factors but without a foreign threat there hardly seemed to be any motive for them to remain beholden to one another.

Yet lo and behold there came a group of elite individuals from each state, meeting in secret in what came to be known as the Constitutional Convention. This might seem less democratic than what common wisdom purports. Indeed, the whole of the American Revolution was, from the start, a revolution of the elites, who had been stifled by British taxes and monopolies on trade. This changed when an English immigrant by the name of Thomas Paine wrote his best selling work Common Sense, bringing the Revolution to the common people, who were distrusted by elites (including Washington and Adams) afraid of rule by the mob. This suggests that active support for independence was less clear cut than what is usually suggested. The issue of the Union between states and of the power of the executive would not be solved until the American Civil war, almost a century later.

Other issues remained unsettled after the signing and ratification of the Constitution, such as that of the establishment of a national currency (monetary union), the single market (economic union), the construction of a central bank, the federal bureaucracy and the existence of a standing army. This last issue was raised many times, not only due of foreign threats, but for the sake of keeping the Union together through force of arms if necessary (as happened later).

Anyway, a group of three individuals decided that the new Constitution was worth keeping and wrote a series of articles defending it before ratification by the state of New York. These are known as the Federalist Papers, written by Alexander Hamilton, John Jay and James Madison. In their works they present what they perceive to be the utility of a Union between states and the evils of separation (I am paraphrasing). They defended the existence of a strong, democratic and stable central Federal government. However, their discussion was wide ranging, approaching the subjects of the differences between the peoples of the different states, the legitimacy of the Convention, the possibility of foreign invasion, etc. The Federalist Papers remain one of the most important documents of modern political thought and a veritable handbook when it comes to a sensible approach of how to govern individuals with diverse interests and motivations.

I shan’t trouble you any further dear reader, except to say this: the American Revolution founded a Federal Republic, where elected officials governed a very diverse people. It succeeded, from my perspective, because the Union was ruled for the people, in spite of the people, a certain controlled freedom of the government that resulted in the effective protection of liberties and its ability to think and act beyond current interests (which contributed to the termination of slavery in America). It did not, however, cower or cut itself off from communication and debate with civil society and remained accountable to it, even enhancing its power to defend itself from tyrannical rule.

Food for thought.

P.S.: I do urge the reading of the following paper “Nobel Lecture: United States then, Europe now”, Journal of Political Economy, Thomas J. Sargent, Vol. 120, N.1, 2012, pp. 1-40

About the author:João Barata is currently a 2nd year student in the Research Master in Economics at Nova SBE. His areas of interest include Political Economy and Macroeconomics. Presently João is working on his thesis subordinated to the topic: Collective Inflation Expectations and Central Bank Behaviour.

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3 Comments

  1. Such an inspiring text, João Barata, especially after the movie “Lincoln” I saw yesterday. I have to confess I am an “economist” that prefers to study the situation now as it is with all the details that surround it but fortunately there are researchers like you that don’t forget the past – an indispensable instrument for today’s science. I understand your difficulty on starting this article but one day hopefully you’ll start as Sargent did in your recommendation: “I work in a macroeconomic tradition (…) I use macroeconometric methods (…) I interpret macroeconomic history (…)”

    1. And maybe get some of that Nobel Prize.
      Well my field is more about large scope movements, so no one as any idea where phenomena start and end, or which two cases are comparable. One needs to take only one look at the studies that attempt to relate monetary shocks to real effects on the economy: “…in this paper, we take monetary shock XYZ to be exogenous, since Volcker fell asleep on his computer after a night of drinking and pushed the button to decrease interest rates.”

  2. João Barata is showing that the positive evolution of society is not the consequence of some “invisible hand” but of the action of a few persons concerned with the society. This is important in these days of divinisation of the idea that if each one takes care of its own interests, everyone will benefit. It is not true, the ones that will benefit are only the ones with more power / money.
    There is a dream, which is the one of discovering the rules / goals that will make the society able of evolution by itself, without the need for some providential person. Evolution is the result of Intelligence. Intelligence is not a divine property, but a property of systems with a set of characteristics. The Technological System has some Intelligence and so Technology evolves continuously; the Scientific System, on the contrary, has not yet found the convenient rules and so the evolution of Science still depends on “geniuses” – most of the scientific knowledge was produced by an astonishingly small number of persons. In Technology there are no “geniuses” because the system has its own Intelligence.
    The evolution of Society is also still dependent on “genius”. Our Society lacks Intelligence, so will not get any better by itself. We must be aware of that. We need Intelligence. That is why João Barata is feeding thought.

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