Property Rights and Peoples' Rights

Property Rights and Peoples' Rights

by Richard “Chip” Peterson, PhD, Aug. 5, 2010


            When the U.S. was founded, there was some concern that both property rights and individuals' rights would be protected by the new form of government. Originally, the 13 states had been formed and run by for commercial and mercantile interests. Britain and its landgrantholders had benefitted from the colonies success through their manipulation of trade and tariffs and rental incomes. Many of the founders of the country had commercial and mercantile interests of their own, and, originally, states restricted suffrage to those who owned property, particularly land, that ensured that voters  would be strongly attached to their community and to community interests. Thus, there was no question that property rights would be preserved given the nature of the nation's first voters.

            There was concern, however, that the rights of non-propertied individuals would also be represented. It was thought best to do so by having a legislative body with at least one house consisting of representatives of the public by public consent. The idea of a direct Democracy was rejected in  favor of a Republic with representatives carrying the will of the people to the legislative body. The idea of a direct Democracy with public voting determining all outcomes was rejected based upon the writings of Aristotle. Aristotle had noted that a pure democracy was deficient since demagogues could excite and direct the emotions of the people and cause them to make hasty, intemperate, decisions that did not respect the rights of minorities.

            In Britain, the House of Lords had represented propertied interests while the House of Commons represented the interests of the common man. That may have generated the interest in a bicameral legislature, that would represent the rights of each class of people. However, in the U.S. The bicameral nature of the legislature was divided between the House of Representatives designed to represent the interests of the public in general and the Senate, which was originally designed to represent the interests of the individual states. While members of the House were to be elected by popular vote of those who had suffrage, members of the Senate were to be appointed by their respective state legislatures. Indirectly, propertied interests may have been reflected by the Senate since state legislatures usually represented commercial and mercantile interests in each state.

            It was thought useful to have the legislative process represent commercial and mercantile interests since government enforcement of the rule of law and the enforcement of contracts was essential to the prosperity of those interests. At the same time, it was essential to have the interests of persons also represented so that excesses in the name of commercial interests could be avoided. Such excesses might include such things as debtors prisons or involuntary indentured servitude.

            Protection of the rights of minorities was assured by a complicated government system with divided executive, legislative, and judiciary functions that contained many checks and balances to limit  the arbitrary abuse of power by any one branch. These protections were enhanced by various      requirements for supermajority voting, including supermajority requirements for amendments to the U.S. Constitution.

            The new U.S. Constitution seemed to achieve a good balance between the various interests as the U.S. economy survived and prospered in the new country. At the same time, America was  a land with many  individual freedoms that attracted many people to immigrate from around the world. The main sore point was the legalization of slavery that persisted until the Civil War.

            However, in 1913, two Amendments to the Constitution were approved that may have had significant adverse consequences. The 16th Amendment allowed for a national income tax that has subsequently led to a concentration of financial resources and the power of the purse at the Federal government level. This has significantly weakened the power of the states relative to that of the Federal government as they often must do the Federal government's bidding and jump through hoops just to reclaim a portion of the tax revenues that their citizens have rendered to the Federal authorities. In addition, the 17th Amendment allowed for the direct popular election of U.S. Senators to represent each state. The individual state legislatures were no longer involved in the selection of senators to represent their interests. Consequently, the interests of the commercial and mercantile people, i.e., many of the people who possessed property in each state, were less well represented at the national legislative level.

At the same time, popular interests became disproportionately more powerful in the national legislature, so property rights, in general have become less well protected since the 17th amendment was passed.

            Some intrusions on private property rights have been apparent for years as the environmental protection agency and endangered species acts have denied property owners certain rights in the use of their land. Some of those restrictions may be justified when they prevent people from using their land in ways that might harm others, but others, such as spotted owl or snail darter protection requirements, primarily represent the taking of private property usage choices from the hands of private owners. While those restrictions typically  reduce the value of private property, their effect has paled in comparison with more recent intrusions against private property rights and the sanctity of contract law.

            The loss of property rights has become quite apparent in recent years, particularly under the rule of the Obama Administration and the Democratic Party controlled Senate and House of Representatives. The Obama administration has overridden the sanctity of contract law by placing the interests of its political supporters (labor unions) above those of legitimate debt holders in its takeover of General Motors. The legislature and Obama Administration have also allowed people to default upon their mortgage obligations with none of the previous penalties attached to debt defaults. Eventually, this will result in losses or reduced earnings for capital owners who have made the loans-- including pension funds who have invested monies on the behalf of potential retirees. In addition, under the Obama Administration's guidance the Environmental Protection Agency has declared that carbon dioxide—which basically is a plant food and is beneficial and not harmful to all carbon based lifeforms when present in moderate amounts-- is a pollutant that should be regulated. The proposed regulations and legislation by the Democrats would massively increase the cost of production in the U.S. and  raise peoples' utility bills, energy costs, and prices of domestically produced goods.

            More ominously, propertied interests now perceive that the present U.S. government is no longer honoring the rule of law and protecting private property rights. They also see that the U.S. government  is using U.S. businesses as cash cows rather than encouraging them to increase their after-tax profits and production. Consequently, business is no longer investing aggressively in the  U.S. and the U.S. recovery from its recent recession has stagnated. In addition, a number of U.S. Corporations who do business in other parts of the world are moving their business operations, and even their headquarters, elsewhere. Consequently, unless the U.S. quickly recaptures the respect for the rule of law and private property rights that accompanied its founding, it can expect to languish or decline economically.





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