How the fundamental principle of American government was transformed from liberty to democracy

Today, most Americans think of “democracy” as the principle underlying government. In 1776, most Americans would have said “liberty.” Democracy was an after-thought.

In his recently revised book Liberty in Peril, Independent Institute research fellow Randall Holcombe elaborates on the history of democracy in America — and it’s not pretty.

“Contemporary American political ideology views the role of government as transforming the preferences of its citizens into public policy.” he writes. This was never meant to be the case.

Every once in a while it’s good to be reminded that democracy is not always in harmony with liberty.

Our Founders worried that the Constitution might lead to too much democracy, and judging by the results, it’s hard to argue they were wrong.

The transformation of the U.S. from a republic — founded on libertarian principle — to a majoritarian democracy that threatens our liberties did not happen overnight.





Randall G. Holcombe on Liberty in Peril

Bob Zadek: Hello everyone and welcome to The Bob Zadek Show, the longest running live libertarian talk radio show on all of radio. It’s the show of ideas, never ever the show of attitude. Thank you so much for listening.

Opinions are kind of boring. We do care, however, about why you have those opinions. It is the “why” of opinions that is infinitely more interesting and infinitely more important than the fact of the opinion itself. This morning we are going to explore a profoundly important topic. It is a topic I have wondered about almost constantly as I have been doing my show and doing my reading of American history: that is how we evolved from a country which was founded on the bedrock principle of Liberty — of personal freedom, and of having government merely protect our rights and not tell us how to run our lives — to one where Liberty has become relatively unimportant — a throw-away for more temporary and tangible benefits.

A perfect example is college campuses today. The freedom of speech, the Liberty to say what you wish free of government interference, has been devalued by a majority of college students in favor of protecting them from being slighted, being harmed, and offended. That’s just one example. We are so willing these days to surrender freedom to turn over our freedom to government, to cash it in exchange for a promise by the government, that is never met, of taking care of certain of our economic and personal needs.

How did freedom become so cheapened?

I have invited Randall Holcombe to join me this morning on the show. Randall has revised and written a book that he first published several years ago called Liberty in Peril: How the Fundamental Principle of American Government was Transformed from Liberty to Democracy. In other words, “Democracy” has become, in the opinion of public officials and most Americans, the coin of the realm — the most cherished commodity. Democracy is citizens’ direct participation in Government. Democracy was feared by the Founders, as we will see during the show.

Democracy is by no means a goal that we should seek to acquire more and more and more of. Democracy is to be feared as much as it is to be valued. Randall is the Devoe Moore professor of economics at Florida State University, and a research fellow at the Independent Institute, which is a wonderful think tank in Oakland, California, which labors mightily and effectively in the belly of the beast in Oakland, California, adjacent to Berkeley. We all know about Berkeley.

Randall was the past president of the Public Choice Society, a past president of the Society for the Development of Austrian Economics, and he’s a senior fellow at the James Madison Institute. Randall, thank you so much for giving us an hour of your time and your wisdom this morning.

Randall Holcombe: Thank you for having me on the show. I appreciate the invitation.

An Ideological Shift: From Liberty to Democracy

Bob Zadek: Now, Randall, tell us the thesis of your book. What prompted you to write and revise Liberty in Peril and what is the point that you make so eloquently with so much data in your book?

Randall Holcombe:When I first started writing it, my main interest was trying to understand the growth of government. The more reading I did, my focus changed. If you were to go back to 1776, just ask the typical American in 1776, “what is the fundamental principle behind the new American government?? That one word would have been “Liberty.” We are designing a new government to protect our rights. You look at the Declaration of Independence. It’s a list of grievances against the King of England. He has violated our rights. He’s violated our Liberty in all these ways, so we have the right to establish a new government.

Now, fast forward to the 21st century. You ask somebody today, “tell me in one word, what is the fundamental principle of American government?” I think most Americans would say “Democracy. We are a Democracy. The role of government is to carry out the will of the people.”

And how do we find out the will of the people?

It is through a “Democratic” decision-making process. We have elections, and a process whereby the legislature makes our laws and basically in one word, our government is a Democracy. I think that’s problematic. A Democracy — a majority — can be just as oppressive as a dictator. So, the purpose of the book was really to look at how that transformation occurred — how that fundamental principle of American government was transformed from Liberty to Democracy. And I think you can see over 200 plus years of American history this transformation occurring. You have to look at the whole evolution of American history.

Bob Zadek: The Founders feared Democracy. There are countless quotes that Randall points out showing how much the Founders feared Democracy. And my view of democracy in America today was summed up by Winston Churchill. He said, “The best argument against Democracy is a five minute conversation with the average voter.”

The point is not to criticize, not to make fun of the voter, but rather to point out the inherent weaknesses of the system. No voter who is sane could spend all of the time necessary to understand all of the issues that confront America and therefore a typical voter is incompetent to decide many issues — not because of any inherent weakness, but because they didn’t have the time or the inclination to study them.

Randall, the best example of that is the 2008 election of President Obama. If we recall, the country was in the economic pits, and Obama was running promising to fix the economic doldrums. In effect, the vote of 2008 election was on whether Keynesian economics or free market economics was the right solution. How in the world could a voter learn the economic theories necessary? Yet the vote was on economic policy. That’s an insane standard by which voters should elect a President. They simply don’t have the information.

The Founders Vision: 1/6th Democratic

Bob Zadek: So Randall, when you point out the unfortunate transition from a country which values Liberty to one which values Democracy, we are regretfully hitching our wagon to the wrong horse. There have been certain key moments in American history when we made a sea change difference by surrendering Liberty in favor of democracy. Tell us some of them, if you will.

Randall Holcombe:I could read you the whole book, except we don’t have an hour to do that, but one place to start is to go back to the American Founding and the Constitution. Look at the Constitution. It almost sounds anti-American to be anti-Democracy, but if you go back and look at the Constitution and the way that government was designed, it looks like our Founders wanted our country to be one-sixth democratic. How do I figure one-sixth Democratic? Well, the Founders designed a government with three branches, the executive, legislative, and judicial branches of government. The three branches balance each other and are given roughly equal power to check each other.

Let’s start with the legislative branch. You have the House of Representatives and the Senate. The House is the democratic part of government because representatives were elected by the people. The Senate, as originally designed by the founders, was chosen by the state legislatures, not by the voters, until the 17th Amendment in 1913 changed that. So now we have direct voting for Senators, but up until 1913, the Constitution specified that Senators are chosen by the state legislatures. And that was an effort to deliberately insulate the Senate from Democratic pressures. One of the things that the Founders wanted was for the Senate to represent the interests of the state governments, not the people. And you look at the judicial branch, they have always been appointed, not elected. They are also insulated from democratic pressures.

Then, in the executive branch, the President was to be chosen basically by the electoral college and maybe by the House of Representatives. And Bob, I think it’s probably worth going into a little bit of detail about the way that the founders envisioned the electoral college, because if you read the Constitution, the electoral college were selected by the States. The Constitution never said how the electors are selected by the States. So it’s up to the States to determine how they select their electors. The electors vote for Presidential candidates in their States. The constitution says they vote in their States on the same day for President. If nobody gets an electoral majority, then the House of Representatives chooses the President. The constitution originally said that they choose the President among the top five vote-getters.

That was changed by the 12th Amendment to the top three electoral vote getters. But the way that the system was designed, the Founders envisioned that the electors would be chosen by the States and they would be people who would be better informed about the candidates than the general public. Also, because the vote was taken by electors, not by the general public, that was another way that the Founders envisioned that their selection of the President would be insulated from democratic pressures. Now, one of the things the founders thought was that in most cases, most electors would vote for a favorite son candidate from their state. So they figured that most electors are going to vote for somebody in their state, and that is one reason why the constitution specifies that electors vote for two candidates, at least one of whom has to be from another state.

But if the electors are voting for their favorite candidates from their state, that means in most cases nobody will get an electoral majority. That’s what the founders envisioned. Founders envisioned that in most cases, nobody would get an electoral majority. So then it would be up to the House of Representatives to choose from the top electoral vote getters. They envisioned that the electoral college would be like a search committee of experts. They would forward a list of names to the House of Representatives, and the House would choose, as the Constitution now reads, among the top three electoral vote getters. So I went into a little bit of detail on that, but that is partly to show that the way the Founders envisioned the system working would insulate the selection of the president from Democratic pressures and from popular voting.

But the Constitution never specified how States choose their electors, and by the time you get into the 1820s, very early in American history, most States went to popular voting for electors. The last state to go to popular voting was South Carolina. That didn’t happen till after the Civil War.

The Constitution was designed to create a government that was one-sixth Democratic.

The Constitution was designed to create a government that was one-sixth Democratic. Only members of the House of Representatives would have been accountable to the voters. Senators were chosen by the state legislatures, justices were appointed, the president was chosen by an electoral college, and ultimately by the House of Representatives. It seems kind of anti-American to say that you’re not in favor of democracy, but if you think about democracy as a government that’s directly accountable to the voters, our Founders deliberately designed a government that wasn’t democratic in that sense.

Bob Zadek: I am passionately and intellectually supportive of the electoral college system for several reasons that aren’t discussed all that much in public today. Imagine how much more pleasant life in America would be if all we had to do was vote for electors and not succumb to the noise of a Presidential election every four years, and the unpleasantness of a Presidential election. Lest I seem like I’m favoring some form of tyranny, I would remind people that Americans are totally comfortable outsourcing many decisions. We vote for representatives in the House because we don’t want to decide on every single issue. We hire people to do it, and we outsource the selection of judges and other key decisions in American life to the Senate.

We outsource many decisions because we can’t be bothered, appropriately, to learn these issues ourselves. So the electoral college is simply another outsourcing. We still get to vote, we get to vote for electors, but having voted for electors, we tell them to do all the hard work of selecting a President since they have the time, inclination, and the motivation to do it. I love an electoral college system and one can be designed to work quite perfectly. So as Randall said, I don’t oppose democracy, I oppose too much democracy.

Democracy is important as a key check on government. It is a check on government. It is not the be all and the end all of government. But if we have elected officials who ultimately have to be answerable to the public, they will behave in a way that we like. To assign the task upon voters is simply misplacing decision making. So Randall, I guess I speak for you, I certainly do not oppose democracy as such, but it is simply a tool to be used judiciously in order to keep an eye on government.

Randall Holcombe: Well, Bob, there are two ways that we might look at democracy and one is that elections are a way of determining who holds the power of government. That’s the way the Founders envisioned democracy. Another way is that the role of a democratic government is to carry out the will of the people.

A Constitutional government with limited and enumerated powers doesn’t do what the people want. It is constrained to do only what the Constitution empowers it to do.

Now, you look at that first vision of Democracy, it’s a way to decide who holds the power of government. But how are those powers determined? Well, originally our Founders thought we have a Constitution that gives the federal government limited and enumerated powers, and Democratic elections are a way to determine who gets to exercise those limited enumerated powers. A Constitutional government with limited and enumerated powers doesn’t do what the people want. It is constrained to do only what the Constitution empowers it to do.

The Progressive Era and the 17th Amendment: A Sea Change

Bob Zadek: You mentioned the 17th Amendment. The 17th Amendment is a fascinating subject. As an aside, the 17th Amendment follows the 16th amendment. What’s the 16th amendment? Income tax.

Those two amendments changed forever the nature of American government and voters’ relationship to their government. They were a sea change. What is important about the 17th Amendment, which was changed in 1913 I believe, during the beginning of the second Progressive Era when Teddy Roosevelt was president, there was all this populism and power to the people and the like.

The 17th Amendment, in my opinion, changed states from being independent, coequal bodies, to agencies of Washington.

And at that time there was a minor scandal where some Senator bribed or through other nefarious means got elected by a state house to a Senator, and that got into the press. So there was an isolated or several isolated events of minor scandals. So power was given to the people.

That meant the States, which had representation in Washington as a political body, had representation. The Senate was their House and the states could protect their interest against intrusion by the federal government into their police powers. The 17th Amendment, in my opinion, changed states from being independent, coequal bodies, to agencies of Washington. So the state of California became, if you will, the California department of the federal government. That is the way states operate substantially today.

Randall Holcombe: Another effect of the 17th Amendment was that it made it easier to pass legislation. Before the 17th Amendment, the House of Representatives represented the interests of the people and the Senate represented the interests of the state governments. So for any law to pass and to be approved by the House and the Senate, it would have to be approved by both the representatives of the people and the representatives of the States. But with direct election of senators, now senators are representatives of the people too, so it lowers the bar.

Now, legislation doesn’t have to meet with the approval of the representatives of the States. And I’ll just give you one concrete example where that probably made a difference. That is Obamacare. When the affordable healthcare act passed, one of the things that did was to impose higher costs on the states because the states had to expand Medicaid programs. And if you think about a Senate that represents the interests of the states, when Obamacare came up for a vote, it was pretty likely if the Senate represented the interests of the state governments, Obamacare would not have been able to shift some of those costs to the state governments. But the Senate doesn’t represent the interests of the state governments anymore. That is just one concrete example of where it might make a difference if the Senate no longer represents the interests of the state governments.

Bob Zadek: You’re exactly right, Randall. I would have picked that as the very same example.

There’s a lot of talk from time to time about Washington imposing what’s called “unfunded mandates.” That is where Washington requires the States to adopt certain policies and carry out certain governmental governmental goals, but does not give them the money to do so. They are unfunded mandates. There would never be even one unfunded mandate because the States through the Senate would not enact the legislation. So, that helped the States preserve their independence. Without the 17th Amendment, states become far less the laboratories of Democracy and laboratories of innovation that chief Justice Brandeis observed at the beginning of the 20th century.

Too much democracy means that too much power is placed in the hands of what the Founders called “the mob,” not the mob in the violent sense , but the mob being the collective lack of wisdom by Americans to master and spend the time to learn all of the issues. So it makes sense to outsource that decision making in a way that we can keep an eye on them at the ballot box. Randall, you also traced in your book, how that trend from Liberty to democracy has had a profound effect upon economic rights. What’s interesting about economic rights is that the Constitution says almost nothing about the economy. It doesn’t use the concept or the phrase “free markets.” It doesn’t talk about capitalism. It says almost no words about the economy, yet the government today runs the economy and controls contracts between private bodies, minimum wage laws, and things of that nature, rent control, and huge swaths of American economic life. How in the world did that come about?

Randall Holcombe: I think we can trace a lot of that back to the progressive era, which started in the late 1800’s. The reason the Constitution says virtually nothing about the economy is that it designed a government with limited and enumerated powers.

Basically the Constitution says, “here are the powers of the federal government,” and then the 10th Amendment says, “Those powers that aren’t explicitly given to the Federal in the Constitution, are reserved to the states or to the people.” The Constitution does not give the federal government any powers over regulating the economy. The Constitution says nothing about a government control of the economy. But it does say that there are limited and enumerated powers of the federal government. Those powers don’t include regulating the economy.

So, how did the federal government get so heavily involved? A lot of this goes back to the Progressive Era and the ideology of progressive democracy. When the nation was founded, the key idea was that the role of government was to protect our Liberty, to protect our rights. The founders really envisioned that the biggest threat to our rights was government. That is why they created a government of limited and enumerated powers. The progressives expanded the purpose of government to not just protect our individual rights but to protect our economic well-being.

Randall Holcombe: At this point in time, somebody could start from nothing and become one of the richest people in the world. People like Rockefeller, Carnegie, Fisk, Vanderbilt, etc. That progressive ideology was a reaction against these people who had amassed a tremendous amount of economic power in a short period of time. The progressives thought that they were using their economic power to take advantage of people who had less economic power. So, the progressive ideology, looking out for people’s economic well-being, from the beginning it was redistributed. The idea was that we were going to impose some costs on these new industrialists, these financiers, in order to provide economic benefits to other people.

That progressive ideology was a reaction against these people who had amassed a tremendous amount of economic power in a short period of time.

It was really a response to the industrializing United States, and the idea was that it was okay to impose costs on some for the benefit of others. Of course, the people they wanted to impose costs on back then were the new rich in the country, those people who were responsible for the rapidly increasing wealth of the country. So, as you look at how that progressive ideology develops over the 20th century and into the 21st century, it says it is ok to impose costs on some people for the benefit of others.

More Government Meddling in Economics

Bob Zadek: Now, Randall, I just want to mention one point that is often overlooked. In your book you refer to Robber Barons during this era. It should be pointed out that popular mythology is that when Rockefeller built Standard Oil Corporation, that it had a substantial control over oil and petroleum products. But prices had never been lower — what Rockefeller did was constantly lower prices. So yes, there were victims of these large entities, but the victims were other competitors who couldn’t compete with Rockefeller. Nothing in the Constitution says that it is the role of government to protect those people who cannot compete on the merits and therefore seek government help to rig the competition. And of course today, the same can be said about Amazon.

Washington is starting to look at Amazon. Is Amazon a monopoly? Should Amazon be broken up? Amazon and all the other big tech companies provide either a free or a ridiculously inexpensive product to consumers. So, yes, there are victims. The victims are the competitors. Who the heck cares about their competitors? The consumers, us voters, get profound benefits. The trust-busting approach of the end of the 19th century was so wrong-headed.

Randall Holcombe: Yeah, absolutely. All of this goes back to the Progressive Era and the idea that part of the role of government — looking out for people’s economic well being — is to protect most people from economic power of powerful individuals. One turning point, you know, as we look through American history and we look at turning points that pushed us further from Liberty and toward democracy, was a Supreme Court case, Munn v. Illinois in 1877. The state of Illinois wanted the right to regulate grain elevator rates. Farmers, when they harvested their grain, would take their grain to grain elevators, which were on rail lines. The grain elevators would buy the grain and then ship it on the rail lines. The state of Illinois thought the farmers were being taken advantage of.

The grain elevators have an unfair bargaining position. So the case went to the Supreme Court. Does the state of Illinois have the right to regulate grain elevator rates? Then Supreme Court said yes. The reason why that’s such a landmark case is that prior to that Munn v. Illinois case, the government had no right to interfere with private economic transactions between individuals. When Individuals make their transactions, it’s up to the individuals to determine what are the terms of their transactions. Now the government can step in and determine the terms of interactions.

So look at minimum wage law. Why does the government have the right to tell people they can’t work for less than a certain wage? That traces back to the Munn v. Illinois case. It’s the first time that the courts said the government has the right to dictate the terms of market transactions between individuals.

Bob Zadek: What’s so interesting about the Munn case, the farmers versus the grain elevator operators, politically there are more farmer voters than grain elevator operator voters. Therefore, too much democracy is behind the scenes. The same thing happens today in spades with rent control. There are more renters than landlords. The same thing happens with minimum wage laws. There are more voting employees than employers. So once we trend towards government being excessively responsive to the voters as opposed to what’s good for the country as a whole — terribly unsound economic policies result. It is a form of vote-buying because elected officials have to and therefore do pander to voting majorities and enact policies that are economically unsound.

Democracy invariably causes the loss of Liberty, in this case economic Liberty.

Randall Holcombe: We pass these laws and somehow we think that they’re in the public interest, whatever that means, but because as you pointed out, citizens don’t have the time to really understand everything that’s going on with the government, the people who are regulated by these government regulations end up taking control of the regulatory process. Similar to the idea of Munn v. Illinois, the Interstate Commerce Act was passed in 1887 largely to regulate railroads. The idea was it was in the interest of the general public for the federal government to control rail rates and rail routes and so forth.

But the general public doesn’t have much knowledge. They don’t have the time to learn what’s going on. The Interstate Commerce Commission and other government agencies end up being controlled by the economic elite, so it actually works against the general public.

A Reason for Optimism: The Power of Ideas

Bob Zadek: People always get moisty eyed about voting. Your duty is not to vote. If you do vote, your duty is to spend inordinate amount of time understanding the issues. One citizen’s duty to another is to vote intelligently or not at all. To just vote per se, without being informed, is a vacuous and empty act, which means you are probably going to respond more to emotion than reason, and the collective result is bad government. It is easy for people running for office to appeal to emotion.

Democracy invariably causes the loss of Liberty, in this case economic Liberty.

That is much easier task than appearing appealing to reason. And therefore, to the extent that people are going to vote without being informed, they are inviting them to be preyed upon by having their emotions drive how they vote. People can have emotions with very little effort. It takes effort to reason. Randall, do you see this trend continuing until, as the Founders feared, Democracy destroys itself?

Randall Holcombe:Bob, that is what looks to be the long-term trend, but nevertheless, I am optimistic. Maybe I’m putting too much emphasis on the power of ideas. I am a professional educator so you would understand that. But let’s go back to the beginning of the Industrial Revolution — the Enlightenment era. One of the things that jump started the Industrial Revolution that gave people more rights and limited government were the enlightenment ideas of people like John Locke, Adam Smith, David Hume, etc.. Those ideas had real power. I’m still thinking along those lines about the power of ideas. Move up toward the end of the 20th century: Ronald Reagan, Margaret Thatcher, they said that one of the sources of their views on freedom came from Milton Friedman. Ideas are powerful.

I started teaching in the 1970s, Bob, and if ever there was a decade to be pessimistic, it was the 70s. We had a wage and price controls. We had lines at the gas pumps as a result. We had rising inflation, we had rising unemployment. Things look like they were getting worse and worse and worse. And then you have the Reagan Revolution, the influence of people like Milton Friedman and Frederick Hayak and things in the 1980s started looking better and better. I mean, it looked like the ideas of freedom were winning out. And we had the end of the Cold War and in the last couple of decades of the 20th century era, there was good reason to feel optimistic.

In the 21st century, I think things have moved back toward where freedom is eroding. But nevertheless, I’m still confident it is in the power of ideas. And so we need to get those ideas across. If people like you with your radio show keep getting those ideas across and people start to understand the value of Liberty and they start to understand the problems that come with the rule government run by a majority, I’m optimistic that we can have a reversal of the trend.

Bob Zadek: The whole theme of your book is concerning democracy and the surrender of Liberty in favor of democracy. John Adams, my favorite founder and the one that I respect the most, wrote a letter around 1814 when he was in retirement, afraid he was going to die and was not being given appropriate credit, he observed in a letter, “Democracy never lasts long. It soon wastes and exhausts and murders itself. There was never a democracy yet that did not commit suicide.” I hear his words in my head as I see what’s going on in California with recently enacted economic legislation.

Of course it seems to me that it’s the economic legislation that will drive us to the ground. I am most concerned about that, because economic regulation is the clear deprivation of the freedom of two consenting adults to enter into a transaction that doesn’t affect anybody other than the contracting parties. And yet government feels the need to regulate that, which means government is substituting its judgment for the judgment of the two contracting parties. When government exercises that much hubris, it scares the heck out of me.

Randall Holcombe: I absolutely agree. And, just quoting the title of my book, I do see that Liberty is in peril. Nevertheless, over more than two centuries, we have retained a fair amount of freedom and I’m hopeful that we can retain this ideology of Liberty and spread that ideology of Liberty and can retain the freedoms we have.

Bob Zadek: How can we follow your work Randall?

Randall Holcombe: You can get a copy of my book, Liberty in Peril, off the Independent Institute website. That is, and you can follow my blog as well.



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