James Madison’s Prescient Warning

-Submitted by David Drumm (Nal), Guest Blogger

Republicans want to raise taxes on the poor to pay for tax cuts for the wealthy. CEOs are using taxpayer funded bailouts to rake in obscene salaries and bonuses. The wealthy fund play-for-pay think tanks that spit out position papers that support their benefactors’ desire to get wealthier. Certain media enterprises push messages such as corporate tax holidays and corporate deregulation that enhance the wealth of the few at the expense of the many.

Professor G. William Domhoff calculates that 1% of the nation’s population owns 43%, and 10% owns 83%, of the nation’s financial wealth. This is the scenario that James Madison warned of, in an essay published in the New York Post.

Madison wrote:

We are free today substantially but the day will come when our Republic will be an impossibility. It will be impossibility because wealth will be concentrated in the hands of a few. A republic cannot stand upon bayonets, and when that day comes, when the wealth of the nation will be in the hands of a few, then we must rely upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions.

The quote is included in the 1972 book entitled The Great Quotations: The Wit and Wisdom of the Ages. The book was written by George Seldes who spent thirty years researching the book for accuracy.

Madison was a firm believer in meritocracy. In Federalist no. 57, he wrote:

Who are to be the objects of popular choice? Every citizen whose merit may recommend him to the esteem and confidence of his country. No qualification of wealth, of birth, of religious faith, or of civil profession, is permitted to fetter the judgment or disappoint the inclination of the people.

When the wealthy use their money and power to influence governmental policy to enhance their wealth and power, meritocracy is replaced by a sense of entitlement. Paul Krugman wrote about the Angry Rich “who feel that things to which they are entitled are being taken away.” In The Wail of the 1%, when the privileged class loses its privileges, they get angry.

Madison’s words ring true today and we ignore his warning at the Republic’s peril. The “best elements in the country” cannot be found in the field of Republican candidates nor in the current occupant of the White House.

H/T: Rick Ungar.

62 thoughts on “James Madison’s Prescient Warning

  1. Nal,

    Excellent choice….on Thursday….clean air on NPR did a show on Madison…and his wonderful working wife while he was out doing what we have read about….

    Something I recall from the show….is Madison thought he was considered “Obnoxious” and that is how it happened that Jefferson wrote the DOI….

    Something else gleaned was Dolly…She created wealth by buying Bonds and such investments that James had no knowledge….They died with some money…due to her diligence and Jefferson died with about 10 million in debt….

  2. Great subject Nal. Good post.

    The only relevant numbers for our nation now are: 1% and 99% … the rest is dictum.

    Madison also alluded to The Germ Theory of Government when he said “Of all the enemies to public liberty war … develops the germ of every other.”

    This was said during a time when the official scientific and medical establishment did not believe in germs. They even put a doctor in the insane asylum for suggesting that doctors wash their hands before going from patient to patient.

    We need to realize that the symbiotic relationship between human and microbe, recently discovered and elaborated on by microbiologists, may lead to a germ theory for the toxins of power as a cause of government corruption.

    We can’t seem to stamp it out with paper ballots, electronic ballots, or any other type of ballot.

    Time to stop doing the same thing while expecting a different result.

  3. Nal,

    “The “best elements in the country” cannot be found in the field of Republican candidates nor in the current occupant of the White House.”

    I agree. Good post!


    Buffett’s Son Defends Occupy Wall Street Protests
    By Andrew Frye and Alan Bjerga – Oct 13, 2011

    Howard Buffett, the Berkshire Hathaway Inc. (BRK/A) director and son of Chairman Warren Buffett, said Wall Street protesters were provoked by abuses from corporations amid a widening disparity between rich and poor.

    “I think it takes that to make things happen sometimes,” Howard Buffett, 56, said of the demonstrations in an interview yesterday in Des Moines, Iowa. Over the past 15 years, “we saw large corporations really screw people.”

    Occupy Wall Street has drawn out protesters from New York to Seattle and gained empathizers among the top executives at Citigroup Inc. (C) and BlackRock Inc. Warren Buffett, the world’s third-richest person, has said he is concerned about inequity in the U.S. The younger Buffett, a farmer and philanthropist, said obtaining enough food has become more difficult for more people.

    “There has never been a larger gap between earnings in this country,” said Howard Buffett, who was in Des Moines to deliver a speech at the World Food Prize conference. “There has never been a time in my lifetime when the government is going to cut an incredible amount of programs that support poor people and feed them.”

    Protesters criticized the government for propping up financial firms including Citigroup and Bank of America Corp. (BAC) in 2008 while individuals struggled with unemployment, depressed wages, foreclosures and reduced retirement savings. Republican lawmakers oppose raising taxes to reduce the U.S. deficit and have pushed for cuts to government programs.

  4. The US govt. just invaded Uganda (for the humanitarian reasons that there is oil there!) So where does that money come from? Why is there money available to wage war but not to provide much needed services for the American people?

    The “savvy businessmen” have devised ever more complex gambling instruments since they crashed and burned our economy in 08. This is done with both the full knowledge of and help of both President Obama and members of Congress. And no, this behavior is not sustainable.

    David Swanson calls this govt. a Plutopentagonocracy. If ever there was a time to take a stand for justice, it is now.

  5. Could you provide a link to the US Invasion of Uganda, please….I would like to read it and could not find anything on it…..Maybe it is just my search terms….

  6. Thank you…It appears to be more of a peace keeping efforts….at least that is my take on it….Hmm…I wonder what Civic Rights Organisation is going to come and help us…..

  7. One of the reasons for an estate tax is so that great concentrations of wealth aren’t passed on generationally and cause a disparity in the wealth held by fewer and fewer people from becoming a destabilizing force in the society and economy. That’s what I’ve read anyway.

    Good reading on the current state Estate Tax, which just keeps getting lowered as time goes by:

  8. SwM,

    We won a huge victory in the Ohio Supreme Court this week when they ruled against the Republican’s effort to stop the voter referendum that is going on. We want it on the ballot so that the voters may decided whether or not the Republican’s gerrymandered maps will stand.

    It is amazing the lengths to which the wealthy will go to protect their imagined entitlements.

  9. What has been the result of the US govt.’s “humanitarian missions” so far? If the US is invading countries for humanitarian reasons, why did we greenlight the killing of protesters in Bahrain in conjunction with Saudi Arabia? Why have we just recently sold Bahrain some of the govt.’s most sophisticated weapons?

    Surely, it must be clear that we “humanitarly” invade based upon oil, not the goodness or badness of who is doing what in another country. If we used war crimes as a real basis for invasion, Obama would need to order himself droned and the US under occupation by the US!

    No one should argue the fact that there are many bad people doing horrible things in various countries, including president Obama in the US. So the question is two fold? 1. Is war the correct response? I would argue, No. War leads to more war. It is extremely profitable, so much so, that the govt. arms every side of every conflict. Don’t believe me, just look it up. 2. if we are in such a fiscal crisis, where did the money come from for this invasion? Obviously, a choice is being made that the govt. will take care of the investments of the elites and let the rest of the people starve. Is this acceptable? I would say, no.

    P.S. The Family is very involved with the Ugandan elites. They are currently sacrificing children in the service of obtaining more wealth. I wonder why we are not going after these people since they are doing such awful things as taking machete’s to children, cutting them to bits and doing ceremonies for wealth with the parts (see the BBC world for that story). Hmmm, could it be we don’t give a shit when the elites who are the friends of US elites commit atrocities?

  10. Nal:

    good post. But the question I have is why is wealth being concentrated?

    At the end of the 19th century/beginning of the 20th century there was a quotation which went something like this – “rags to riches to rags in 3 generations”. It doesnt work like that anymore. Why not?

    The mid to late 19th century saw incredible advances and great wealth created. Government played a role but not to the extent it does today.

    What is happening, at least in my opinion, is that government is responsible for this concentration of wealth. Had Wall St. not been bailed out a good many wealthy would have lost their fortunes and rightly so. Darwin is good for markets too.

    Government regulations/interventions are preventing natural market forces from culling the heard and are rewarding rather than eliminating inefficient uses of capital.

    Get rid of the idea of too big to fail and some other regulations which perpetuate poor performance and you will see a return to a more equitable distribution of wealth.

    More people will be able to take part by simplifying business creation and by getting rid of regulations which make it hard for a little guy to compete with the big guys. More little guys means a better deal for everyone.

    More people should also start working for themselves and get over the idea of a corporation taking care of them until they die. Back in Madison’s day most people were self-employed or had small farms.

  11. Blouise, It is much worse here with all the wealthy oil and gas people in control of the tea party legislature and Rick Perry.

  12. Activist Who Reagan Called ‘One Of The World’s Greatest Labor Leaders’ Coming To Support Occupy Wall Street

    As ThinkProgress reported earlier this week, former Polish anti-Soviet activist, union leader, and president Lech Wałęsa announced that he supports the occupation of Wall Street by demonstrators upset about economic injustice.

    Now, Wałęsa has announced that he will be joining the protests in New York city in person:

    Solidarity hero Lech Walesa [sic] is flying to New York to show his support for the Occupy Wall Street protesters. “How could I not respond,” Walesa told a Polish newspaper Wednesday. “The thousands of people gathered near Wall Street are worried about the fate of their future, the fate of their country. This is something I understand.”

  13. You know something Elaine….that is kind of scary…I am sure there are some folks that would not argue the point that Reagan is to the left of the current office holder….

  14. From my point of View and I hold it dearly….Reagan did more to bastardize the Tax system as it stood then….something called TEFRA….I do not put him on any pedestal…..If that is your wish you may do so…A lot of times what people say that they are against is really what they are for….as dredd said…whats up is down and whats down is up….

  15. The maldistribution of wealth has been accomplished through buying politicians of all stripes who then enact legislation to further concentrate wealth in the hands of those who purchased them. This has not only occurred in the US but throughout the world. For example, it is a socialist party in Greece ramming austerity down the throats of their people. So looking at this as an issue of party politics is a mistake. This is a world wide phenomena which appears to be at the breaking point.

    Today is a world wide day of action for this very reason. If someone has interest in joining the day of action there is information at occupy wall street.

  16. lottakatz 1, October 15, 2011 at 10:56 am

    One of the reasons for an estate tax …

    That is correct.

    According to the Wall Street Journal, a plutonomy is inherently unstable: “Plutonomies are far less stable than economies built on more evenly distributed income” (see The Homeland: Big Brother Plutonomy).

  17. SwM,

    Not only did the Republicans gerrymander, they attempted to thwart the democratic process as if the State of Ohio is some third world country ruled by despots.

  18. Swarthmore Mom.
    You are spot on that the economic troubles started during the Reagan years and have continued unabated since then.
    Great updates! I was really happy to see that Lech Walesa is coming to OWS. The movement is really spreading.

  19. SwM,

    The vote in the Ohio Supreme Court supporting the right to a voter referendum on this issue was 7 – 0!

    Now we have to get the clock reset for signature collection … another trick the Republicans have tried to use to thwart democracy.

  20. SwM,

    Anyone who thinks the battle to protect this Republic and its democracy is only taking place overseas is a fool. That battle is also being fought right here, at home … both in the courts and in the streets.

  21. There are many of us who understand the importance of Madison’s words and take his warnings seriously. We don’t just talk about it … we act on it.

  22. Jill,

    It isn’t just the politicians in this country who are to blame for the economic woes of many countries. A number of our financial institutions bear a great part of the responsibility.


    Regarding Greece:

    How Goldman Sachs Helped Greece to Mask its True Debt
    By Beat Balzli
    Der Spiegel

    Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country’s already bloated deficit.


    Wall St. Helped to Mask Debt Fueling Europe’s Crisis
    February 13, 2010
    New York Times

    Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

    As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
    Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.
    The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.
    It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

  23. The 1% seem to have understood the workings of government better than the 99%, and acted on it.

    Thus the 1% – 99% disparity.

    Only good actions are worthy.

    A man not given to frivolous words, in public anyway, Robert Gates, recent said:

    I do believe that we are now in uncharted waters when it comes to the dysfunction in our political system — and it is no longer a joking matter … we have lost the ability to execute even the basic functions of government much less solve the most difficult and divisive problems facing the country. Thus, I am more concerned than I have ever been about the state of American governance.” (Constitution Center in Philadelphia, where he received the Liberty Medal).

  24. The No-Pay Movement
    Matt Taibbi
    August 6, 2010

    “Often also called an activist, Mr. Keiser created quite a stir a few days ago when, on an Al Jazeera program, he claimed that Greece, for the past decade, has fallen victim to the “economic terrorists” of the Wall Street banking systems and the IMF. In the interview which followed, he claimed “if the Greeks want to be protected from the IMF, then they should nationalize their banks thus establishing government owned institutions so as to revive the banking system”, while at the same time “ceasing to pay back the loans which were issued illegally” via “cooking the books” of the Greek economy by Goldman Sachs. He proposed the expulsion from the country of American banks as well as the IMF. The consequence will be “two or three years of heavy recession”, during which time Greece will be able “to rebuild its economy”, ensuring its economic independence.”

    via The IMF Flag Reads: ECONOMIC SLAVERY.

    Since I started covering the financial crisis a year and a half ago, I’ve been getting a lot of letters that say things like, “This all sucks. But what should we do about it? If you don’t have any answers, what’s the point?”

    I don’t want to get into this too much since I have more on this coming out in my book, but I would like to point out some of the answers other people are providing to this question. One is this above plan from the hilariously blunt Max Keiser, whose “Goldman Sachs are scum” interview was one of the comedy highlights of 2009.

    Keiser in an interview basically says that the debts countries like Greece owe to banks like Goldman, Sachs for loans and rate swaps are illegitimate since they were criminal deals, made with the intent to cook Greece’s books and defraud the citizens of Greece out of their tax money. He therefore proposes that Greece should simply stiff Goldman for those obligations and that, furthermore, American banks should be expelled from the country while the government temporarily nationalizes its banking system and establishes its independence from the financial services industry.

    I’m not sure I know enough about what the consequences of a plan like that would be to say whether this is feasible or not. But I think Keiser’s idea does underline an important point about the situation, which is that as powerful as these Wall Street banks may seem, they are also exquisitely vulnerable. Right now virtually all of them are dependent upon the government keeping accounting standards lax enough for all of them to claim to be functional businesses. It is generally accepted that if the major banks on Wall Street were forced to mark all of their assets to market tomorrow, they would all be either insolvent or close to it.

    Thus their “healthy” financial status is already illusory. So imagine what would happen if large numbers of those dubious loans on their balance sheets that they have marked down as “performing” were suddenly pushed ahead of time into the default column. What if Greece, and the Pennsylvania school system, and Jefferson County, Alabama, and the countless other municipalities and states that are wrapped up in these corrupt deals just decided to declare their debts illegitimate and back out?

  25. Will Goldman Sachs prove greed is God?The investment bank’s cult of self-interest is on trial against the whole idea of civilisation – the collective decision by all of us not to screw each other over even if we can
    Matt Taibbi
    The Guardian, Friday 23 April 2010

    So Goldman Sachs, the world’s greatest and smuggest investment
    bank, has been sued for fraud by the American Securities and Exchange Commission. Legally, the case hangs on a technicality.

    Morally, however, the Goldman Sachs case may turn into a final referendum on the greed-is-good ethos that conquered America sometime in the 80s – and in the years since has aped other horrifying American trends such as boybands and reality shows in spreading across the western world like a venereal disease.

    When Britain and other countries were engulfed in the flood of defaults and derivative losses that emerged from the collapse of the American housing bubble two years ago, few people understood that the crash had its roots in the lunatic greed-centered objectivist religion, fostered back in the 50s and 60s by ponderous emigre novelist Ayn Rand.

    While, outside of America, Russian-born Rand is probably best known for being the unfunniest person western civilisation has seen since maybe Goebbels or Jack the Ripper (63 out of 100 colobus monkeys recently forced to read Atlas Shrugged in a laboratory setting died of boredom-induced aneurysms), in America Rand is upheld as an intellectual giant of limitless wisdom. Here in the States, her ideas are roundly worshipped even by people who’ve never read her books oreven heard of her. The rightwing “Tea Party” movement is just one example of an entire demographic that has been inspired to mass protest by Rand without even knowing it.

    Last summer I wrote a brutally negative article about Goldman Sachs for Rolling Stone magazine (I called the bank a “great vampire squid wrapped around the face of humanity”) that unexpectedly sparked a heated national debate. On one side of the debate were people like me, who believed that Goldman is little better than a criminal enterprise that earns its billions by bilking the market, the government, and even its own clients in a bewildering variety of complex financial scams.

    On the other side of the debate were the people who argued Goldman wasn’t guilty of anything except being “too smart” and really, really good at making money. This side of the argument was based almost entirely on the Randian belief system, under which the leaders of Goldman Sachs appear not as the cheap swindlers they look like to me, but idealised heroes, the saviours of society.

    In the Randian ethos, called objectivism, the only real morality is self-interest, and society is divided into groups who are efficiently self-interested (ie, the rich) and the “parasites” and “moochers” who wish to take their earnings through taxes, which are an unjust use of force in Randian politics. Rand believed government had virtually no natural role in society. She conceded that police were necessary, but was such a fervent believer in laissez-faire capitalism she refused to accept any need for economic regulation – which is a fancy way of saying we only need law enforcement for unsophisticated criminals.

    Rand’s fingerprints are all over the recent Goldman story. The case in question involves a hedge fund financier, John Paulson, who went to Goldman with the idea of a synthetic derivative package pegged to risky American mortgages, for use in betting against the mortgage market. Paulson would short the package, called Abacus, and Goldman would then sell the deal to suckers who would be told it was a good bet for a long investment. The SEC’s contention is that Goldman committed a crime – a “failure to disclose” – when they failed to tell the suckers about the role played by the vulture betting against them on the other side of the deal.

    Now, the instruments in question in this deal – collateralised debt obligations and credit default swaps – fall into the category of derivatives, which are virtually unregulated in the US thanks in large part to the effort of gremlinish former Federal Reserve chairman Alan Greenspan, who as a young man was close to Rand and remained a staunch Randian his whole life. In the late 90s, Greenspan lobbied hard for the passage of a law that came to be called the Commodity Futures Modernisation Act of 2000, a monster of a bill that among other things deregulated the sort of interest-rate swaps Goldman used in its now-infamous dealings with Greece.

    Both the Paulson deal and the Greece deal were examples of Goldman making millions by bending over their own business partners. In the Paulson deal the suckers were European banks such as ABN-Amro and IKB, which were never told that the stuff Goldman was cheerfully selling to them was, in effect, designed to implode; in the Greece deal, Goldman hilariously used exotic swaps to help the country mask its financial problems, then turned right around and bet against the country by shorting Greece’s debt.

  26. “I think all the world would gain by setting commerce at perfect liberty.”

    Thomas Jefferson, Letter to John Adams, July 1785

    “The right of property is the guardian of every other right and to deprive a people of this, is in fact to deprive them of their liberty.”

    Arthur Lee, An Appeal to the Justice and Interest of the People of Great Britain, in the Present Dispute with America, quoted in James W. Ely, The Guardian of Every Other Right: A Constitutional History of Property Rights, Third Edition (New York: Oxford University Press, 2008)

    “In a word, as a man is said to have a right to his property, he may be

    equally said to have a property in his rights.”

    James Madison, 1792 “Property”

  27. Maybe the Oxford Dictionary can clear this up, but surely Madison was not talking about pathogens when he referred to “germ” but to the essence of the seed from which the plant grows. Madison’s prescience was about people and power, not bioscience.

  28. “That is not a just government, nor is property secure under it, where the

    property which a man has in his personal safety and personal liberty, is

    violated by arbitrary seizures of one class of citizens for the service of

    the rest. A magistrate issuing his warrants to a press gang, would be in his

    proper functions in Turkey or Indostan, under appellations proverbial of the

    most compleat despotism.”

    James Madison, 1792 “Property”


  29. “If the United States mean to obtain or deserve the full praise due to wise

    and just governments, they will equally respect the rights of property, and

    the property in rights: they will rival the government that most sacredly

    guards the former; and by repelling its example in violating the latter,

    will make themselves a pattern to that and all other governments.”

    James Madison, 1792 “Property”

    In other words political and economic freedom are required for human liberty. One or the other is not sufficient for freedom.

  30. Elaine M.1, October 15, 2011 at 11:12 am

    and Blouise1, October 15, 2011 at 12:08 pm ; yes, I hope so!

    and I am much drawn to this; “No qualification of wealth, of birth, of religious faith, or of civil profession, is permitted to fetter the judgment or disappoint the inclination of the people.”

  31. From OWS web-page;

    Reader-submitted Form Letter for Politicians.

    by Occupy Wall Street on Saturday, October 15, 2011 at 5:10pm

    Dear Elected Official:

    I appreciate all of the decisions you’ve made to support those who are not high earning CEOs and the other folks that make up the 1% that hold most of the wealth in the US. The middle class makes up the majority of citizens in the US. In response to Occupy Wall Street protests, pleaseinform me of any legislation you are willing to sponsor to address the following issues:

    1.Failure to hold corporate and bank executives accountable for activities that lead to the need for a bailout. The continued and exorbitant bonuses/salaries should be illegal until all bailout funds have been paid and then regulated.
    2.The stripping of employees’ right to negotiate for better pay and safer working conditions.
    3.Foreclosures processed and completed without the production of the original mortgage.
    4.The consistent outsourcing of labor and reduction in US workers’ healthcare and pay.
    5.The court approval of corporations having the same rights as people, with none of the culpability or responsibility
    6.The spending of millions of dollars on corporate legal teams that find ways to excuse health insurance commitments/contracts
    7.The continued perpetuation of inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
    8.Corporations determining economic policy, despite the catastrophic failures their policies have produced and continue to produce
    9.15.Donations of large sums of money to politicians who are supposed to regulate the corporations (conflict of interest)
    10.The covering up of oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit
    11.The corporate control of the media which purposefully keeps people misinformed and fearful
    12.The blocking of alternate forms of energy which keeps the US dependent on oil
    13.The perpetuation of colonialism at home and abroad
    14.The poisoning of our food supply through negligence, and undermined the farming system through monopolization.
    15.Profits made from the torture, confinement, and cruel treatment of countless nonhuman animals.
    16.The increasing level of student debt on education loans
    17.The selling of American’s privacy as a commodity
    18.The use of the military and police force to prevent freedom of the press
    19.The deliberately refusal to recall faulty products endangering lives in pursuit of profit
    20.The blocking of generic forms of medicine that could save people’s lives in order to protect investments that have already turned a substantive profit
    21.The acceptance of private contracts to murder prisoners even when presented with serious doubts about their guilt
    22.The participation in the torture and murder of innocent civilians overseas
    23.The continued creation of weapons of mass destruction in order to receive government contract

    I hope that you will be willing to sponsor legislation to rectify some of these problems and any others that have created gross inequities in our country. I also hope that you will facilitate changes in our economic and political systems that will create more equity with regards to tax rates. The continued funding of overtime for police officers can be halted with your immediate action.

    I am willing to meet to discuss any of these issues. Please let me know of any way I can assist.



    Phone number

  32. Thanks to all of you who have posted links, articles, letters and videos on this thread … I have learned a great deal.

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