Capitalisn’t: Was the Constitution an Antidemocratic Coup?

Episode Transcript

Michael Klarman: Madison and the other framers understood that the Articles were flawed, and everybody agreed with that. What they didn't agree was how far you should go in the direction of creating a vastly more powerful national government, and also a national government that was set up to be very far removed from populist influence.

Luigi Zingales: Most of us were taught the same story. The founders were wise, the Constitution was almost handed down from heaven, and anyone who opposed it was a crank or a villain. The real history is, as usual, messier, and it turns out to be a story about money, debt, and who gets to write the rules, which makes it exactly our kind of story.

Bethany McLean: What if one of the greatest political achievements in history was also in part a reaction against democracy itself, a betrayal of the spirit of the revolution that was being unfairly imposed on the public by a wealthy elite? That's the argument that Michael Klarman makes in his book, Framers' Coup. He argues that the Constitution was not simply designed to create democracy. It was actually designed to constrain it.

Luigi: Bethany, when I think about the word coup, I think about generals with sunglasses, tanks, and blood in the street. The Philadelphia Convention was none of the above. Why does the title demean the founding fathers as deplorable golpistas?

Bethany: What exactly is a golpista, Luigi, [laughs] before I answer your question?

Luigi: It's somebody who does a golpe in Spanish.

[laughter]

Bethany: Okay, fine. I'm betraying my ugly American lack of linguistic ability. All right, I think we should let Michael defend himself, but I think he uses the word coup in a subtler way to indicate a political transformation in which a relatively small elite changes constitutional rules in ways that increase its power and reduce the influence of existing democratic institutions.

Luigi: I will actually start with the word coup. Bethany and I had some discussion about the use of this word, which is pretty strong. Can you explain to our listener where you come from?

Michael: I can give you a very quick answer to that, which is that is in there because of the Oxford marketing department. I'm not uncomfortable with the title. I think the Founding is a coup in the sense that I think the Framers managed to write and get adopted a constitution, which is not quite what most Americans wanted. I was going to call it something else.

There was a quotation from Benjamin Franklin talking about how passions and interests and some other things were what really produced the Constitution. I was just trying to get away from the idea that this was abstract political theory and this was designed to be the best possible form of government. Rather, it was a set of people with a set of particular interests. That was boring, and it had too many words for the marketing department. We ended up with The Framers' Coup.

Bethany: Luigi and I both understand that having lived through that process ourselves. I had a different definition that I wanted to ask you about, which is: what do you think democracy is? What is democratic?

Michael: Well, it's not an uncontroversial term. It means in some sense that the people are going to control the government. Of course, there are all sorts of qualifications. Nobody thinks that majorities get to do everything they want. They don't get to have a vote whether to enslave people. They don't have a vote on whether to segregate schools racially. There are lots of different forms of democracy. It can be more direct, less direct. You could have government by referendum. The Framers thought democracy was actually a dirty word. They wanted a republican form of government.

Basically, the argument of the book is once the Constitution was up and running, the Framers had designed it so that there would be as little populist influence as possible. You do that through very long terms in office, indirect elections, very large constituencies, leaving out provisions for recall and instruction and mandatory rotation in office.

Hamilton's view was that as long as the people ratified the thing, you could have a lifetime tenured president, a lifetime tenured Senate. That was consistent with the idea of republican government. I don't think most of us would be very comfortable with that today, but I don't think there's any neat definition of democracy. It means roughly that the people are in charge of their government, and there are a thousand different ways to design that.

I think we've moved quite far away from that in modern times just in terms of how much money is dominating politics. The idea that people could spend $20 billion in a presidential election, or Elon Musk could spend $300 million to elect Donald Trump, who then put him in charge of something nobody'd ever heard of to gut the federal government. That's not really democracy, or Elon Musk spending $20 million to influence a Wisconsin state judicial contest. We've moved very far in the direction, even though it's ironic because we talk about the populist right, which would purport to believe in government by the people, but in fact, that's increasingly not what we have.

Luigi: You're not in the law and economics, but I'm sure you're familiar with the fact that in economics, we recognize that there are situations in which agents can freely choose an outcome that makes everybody worse off, like the infamous prisoner's dilemma. Reading your book, I got the impression that James Madison was really clever in game theory, and he framed the ratification process in a way that maybe not everybody was forced to ratify, but I thought that part of the reason why you use the word coup, people were forced into the ratification in a way that they didn't feel was completely free. Is that right, my reading, or am I overreading?

Michael: There are a couple of ways in which I think that's absolutely right. One thing they did was they changed the decision rule. Under the Articles of Confederation, you were supposed to have unanimity for any changes, and I think some people played along with the convention process on the assumption that everything would have to be ratified unanimously or else they just wouldn't have participated. The framers just changed the rules, and they got away with it. They wrote a constitution they liked. They didn't think they were going to get a better one with another shot at it, so they tried to make it as easy to ratify as possible.

They said nine states can put it into motion, and the other four states are then free to join or not, but that put tremendous pressure on the holdout states. Once you got to nine, it was almost inevitable you were going to get to 13 because the holdout states, for example, would be subject to trade discrimination. They were outside the country. They could be denied military protection. Maybe most importantly, they were cut out of the important decisions that would be made by the First Congress, including locating the national capital, which was worth a lot of hard currency, to whichever state housed the capital.

That was a big factor in New York's ratification. New York was the capital at that time, and New York would obviously lose the capital if New York State refused to ratify. In that sense, changing the decision rule and just doing it disingenuously and getting away with it, that was one of the most astonishing parts of the struggle was they got away with it. The other thing is that Madison and the other framers understood that the Articles were flawed, and everybody agreed with that, and so there should be changes.

Almost everybody agreed, for example, that Congress needed to be given the power to adopt tariffs. Congress needed to be given the power to regulate foreign commerce because other countries were attacking American commerce, and the United States government didn't have the constitutional power to respond in kind. Everybody agreed you should amend the Articles. What they didn't agree was how far you should go in the direction of creating a vastly more powerful national government and also a national government that was set up to be very far removed from populist influence.

What the Framers did, which is very clever, is they gave people a choice between the flawed Articles and the Constitution, and then they desperately tried to avoid any effort at compromising on something in between, and they succeeded in doing that. The way you would have gotten to some compromise on something in between, which would have been closer to, I think, where the median American voter was, was either if you had a second convention, which some people called for, "We've written a Constitution, and we've now had a nationwide campaign investigating it, proposing amendments, let's have a second convention." The Framers desperately tried to avoid that.

Then the other way was that you could have some amendments antecedent to approval of the Constitution, and the Federalists, the people who supported ratification, desperately tried to avoid that as well. They said, "Oh, no, you need to ratify and just take on good faith." I promise that there will be amendments. You can't have antecedent amendments. A lot of people thought, well, you'd be crazy to go along with your promise. Why don't we have some amendments first, and then we'll vote? The Framers, I think, narrowly managed to head that off. Yes, forced is too strong a word, but they strongly influenced the process in a way that I would say it's not genuine consent. It's artificial consent.

Bethany: It's that thinkers throughout history, from Plato to Hobbes, had feared unbridled democracy, that it leads inevitably to tyranny. If, and maybe this is an incorrect interpretation, but if the Articles were closer to unbridled democracy than the Constitution ultimately became, and the Articles really didn't work, how much of the Framers' response was a legitimate response to this fear of what could happen if they didn't temper this in some way?

Michael: The Articles are not really the democratic problem; it's the state constitutions and the state legislature. The Articles are problematic in the sense that they just don't create a very powerful national government, and the national government could issue requisitions, which are basically just requests for states to cough up money, but they had no coercive authority, and states treated the requisitions as voluntary.

The Articles are a problem, but there are two different issues here. One is the lack of power in the national government, and the other is these democratic state constitutions that were adopted mostly in 1776, 1777 when the Revolutionary War was being fought. The Revolutionary War is going to be fought by ordinary people serving as soldiers, and it might be hard to get ordinary people to fight as soldiers if they're not allowed to participate in governance. The state constitutions were very democratic relative to really anything the world had seen.

In Massachusetts, for example, something like 90% of White males actually voted, which in Great Britain at the time, my sense is 5% of adult males would have been participating. Were the fears justified? Again, I think the articles were falling apart, and everybody understood that, and that was a huge problem. If you couldn't raise money, you couldn't pay off the French loan that had enabled the country to win the war. You couldn't pay off the Dutch bankers. Nobody's going to lend the United States money if you don't pay your debts. You couldn't raise a navy so that the Barbary pirates were kidnapping American sailors, and the United States couldn't raise a navy to fight them. It was an embarrassment. That was clearly a problem.

The question is more whether the fears of overly democratic government were really justified. I think there are two different points I would make. One has to do with the debt relief and the paper money laws. Farmers were going bankrupt. We can talk about why. They turned to state legislatures for relief. State legislatures gave them that relief because most of the farmers voted, and most people were farmers. They did provide, for example, tax relief. You may not have to pay your taxes this year. You can pay them in tobacco rather than in gold. They provided paper money land banks.

Critics disregard this as printing paper that's worthless. Actually, the paper money land banks were a pretty reasonable way to cope with the problem of recession in a cash-poor society. Farmers were putting up collateral, and they had to pay interest on the loans. In many states, the paper didn't really depreciate that much.

James Madison just thought-- remember, this is an era when there are only a couple of banks in the entire country. In the South, there's no banking whatsoever. This is a way for the government to lend farmers some money because otherwise they're going bankrupt, and they can't pay back their creditors. If you think that that scheme is a justifiable scheme, then yes, the Framers' fears are a little bit exaggerated. Another good argument for the scheme is the farmers are being heavily taxed to pay off the war debt, but the war debt is no longer in the hands of the people to whom it was issued, like soldiers getting paid in paper or merchants selling horses or food to the army in paper.

It had all been bought up by speculators. An incredibly small number of merchants in New England had bought up the debt at $0.10 on the dollar, and they were now lobbying the state legislature to pay it off at face value. Again, not a crazy argument that maybe the farmers shouldn't be bankrupted in order to pay off the speculators.

The other point is about Shays' Rebellion. In Massachusetts, which had one of the more conservative constitutions, they ended up not issuing the paper money, and they were reluctant to give tax relief. A couple thousand farmers led a revolt, literally an armed revolt. They shut down the civil courts because they didn't want to lose their farms. Letters are being written by elite statesmen in Massachusetts to George Washington and James Madison saying these Shaysites- it was called Shays' Rebellion- these Shaysites debtors want to annihilate debt. They want to annihilate public debt, private debt. They want to redistribute property like they're communists. That was just way over the top.

These are actually pretty conservative, middle-class, Western Massachusetts farmers who don't want to be bankrupted. They think the Massachusetts legislature is dominated by Eastern elites, Eastern bankers. They don't think they should be bankrupted to pay these people on their speculation purchase of debt. The letters being written by George Washington's friend and former Commander Henry Knox, other leading statesmen back to Congress in New York and to Washington, Madison, and Virginia are just way over the top. That's what's scaring them into supporting a Philadelphia convention and a more nationalist constitution.

My perspective is it's like calling Mamdani a communist because he wants to give you free buses. Of course, it's way over the top. I think it was analogous back then, and it's probably the way wealthy elites always regard mild forms of redistribution as the camel's nose under the tent. The opponents of the New Deal called it communism. The opponents of the Great Society, Medicare and Medicaid, called it communism. Now, any kind of redistribution is denounced as communism. Mamdani is a communist because he wants rent relief and free buses. It's absurd. I think there was some element of that as well at the time.

Luigi: I was actually impressed by how concentrated the ownership of public debt was, so much so that you hint to this, but you don't push it too much. I want to understand why. You could even argue that there was a conspiracy to create a constitution in order to profit from the debt. Some of the founders did profit tremendously. Hamilton is one of those that profit from the debt. Is there a financial interest in passing the Constitution?

Michael: Yes and no. The divisions really don't quite break down along those lines. There are lots of big holders of government debt. One of the biggest is Elbridge Gerry in Massachusetts, who is a strong opponent of the Constitution. Then there are lots of strong supporters of the Constitution, people like Madison, for example, who are not holders of government security. It doesn't break down quite along those lines.

On the other hand, the government bondholders are clearly lobbying for the Constitution. You can actually find that the markets for government securities are going up and down depending on how ratification is proceeding in the states. When a bunch of states ratify, the value of the national debt goes up. When New Hampshire had a convention, and then they allowed it to terminate early because the Constitution wasn't going to get through and the value of the debt goes down, it's quite clear that the speculators are wagering that the Constitution will enable the payment of the debt.

Hamilton is a big believer in the sanctity of public debt. Not only is he going to make sure he gets paid; he's going to have the federal government absorb the state debt and make sure that gets paid. That turns a lot of state speculators into supporters of the national government because once the national government is responsible for paying off the state debt, they're willing to give greater taxing power to the national government.

To my knowledge, Hamilton was actually not a speculator. He just is somebody who has very strong views about the importance of public fiscal responsibility and that you have to pay off debt. He loves the British system. He thinks the Bank of Britain is something to be emulated. He thinks the British House of Lords is something to be emulated. He thinks the fact that Britain is so good about paying off its debts is why Britain has been able to dominate continental Europe in wars over the last century. He's trying very much to emulate that.

I actually think it would probably be selling Hamilton a little short to say that was his motive. Hamilton just had a really strong idea about the way things ought to work. Yes, there are speculators who are going to profit big time. I don't think that quite explains the divisions. I think probably it's a little bit more along class lines that the elite want power in their hands. The elite is more likely to believe that paper money is a disaster. Some speculation, but probably unfair, I think, to attribute it to Hamilton and Madison.

Bethany: That leads into the next question. I think one of the tensions that is implicit in your book is this idea that the government should be run by disinterested people who have achieved enough wealth previously in their life that they can afford to be in the government and not express their own narrow interests. That obviously is an elitist system. There's always been this counterargument that this promotion of private interests is what politics should be about instead. Obviously, in current times, especially with the rise of lobbying with our current president, we're in an era where it is all about the promotion of private interests. How do you think about that tension?

Michael: It's a great question. Let me break it into two different parts. One is the idea: should government promote the public interest, or is interest group pluralism a normatively attractive thing, and the other is a view whether there really are a class of disinterested people, and whether there's any correlation between that and wealth. I think all the Framers believed that government should promote the public interest. That's a big part of American history. It's really not-- I guess you get some statements in the early 20th century that what's good for General Motors is good for the country. Then you get political scientists writing in the 1950s saying, well, interest group pluralism is all we have, and because there are so many interest groups, they'll break against each other and you'll emerge with something that's more in the public interest, and then some of them even invoke Madison's Federalist 10 for that proposition, but that's a misreading of Federalist 10.

What Madison thought was in a large geographic area, there'd be a greater diversity of interest, so they would clash, and then maybe when they clashed and fell apart, you could have somebody genuinely pursuing the public interest. I don't think at the founding or for many decades afterwards, there were many Americans who would have openly identified as a good thing the idea that government just pursued the interests of some private entity. All of Jacksonian democracy, which swept the country beginning in the early 19th century and remained pretty much hegemonic until the 1850s, the whole idea of Jacksonian democracy was that a wealthy group had taken control of the national government, people like stockholders in the national bank, and that we needed to get government back to the idea of promoting the public interest.

Okay, so Madison clearly believes in the public interest, but he also believes that the people who will pursue that public interest, as you said, are the wealthy elite who got it made and don't need to worry about commercial interest. They can think about what's good for the country. That's just an association between people and a kind of attractive, whitewashed view of themselves, which probably throughout history, people have always held. People can believe anything good about themselves.

Most people who held slaves thought they were doing the world a good thing, including the slaves, by educating and Christianizing them. Slavery is a welfare system. It's provided for young people and old people, unlike capitalist industrialism, which chewed people up and spat them out. Anybody can convince that anything, I think, that's in their interest is actually in the interest of the general good.

People like Madison and Jefferson and Hamilton certainly thought that they were pursuing the public interest, but it just happened to be that their view of the public interest was paper money is the worst thing you could imagine. That ordinary people don't have the talent to run government. Their opponents, the Anti-Federalists, which is the name given to the people who opposed ratification, they didn't believe that. They were much more democratic, and they think the average barkeeper or blacksmith or carpenter had the basic sense and experience to run government. They could participate in government. Government should consist of ordinary people as much as wealthy people.

That was a more modern view, and that view, I think, quickly spread to the point that you really couldn't get, except in South Carolina, which was very aristocratic all the way to the Civil War; you really couldn't get a lot of people running for office saying, "I'm wealthy, and I know better than you." It might still be that the wealthy people would be elected, but they had to put on this pretense of populism, very much like a lot of the Republican Party today, right?

The Republican Party as a populist party is absurd when you look at what it stands for, because the only thing they really care about is tax cuts for the wealthy, eviscerating the social safety net, and deregulation of as large a swath of the economy as possible, right? The only law they passed in the first Trump administration and the second Trump administration is a massive tax cut.

Luigi: It is a fact that even if the elections are free and fair, most likely the richer are more likely to be elected. The median net worth of a US senator today is more than 70 times the census report and median US household net worth. It seems to me that the Framers really use this layered election, think about the electoral votes for president, as a way to filter the ordinary man from any high position and just allow only the wealthy to emerge. To some extent, it was a walking back of the promise of the revolution where everybody was created equal and had equal opportunity to rise to the top.

Michael: You're exactly right. The Framers wanted to filter ordinary men out of office. Madison talked about enlarging and refining the popular will. There are a bunch of ways to do that. You mentioned the electoral college, indirect elections. State legislatures pick senators; electors chose the president. It wasn't even clear that electors would be directly elected by the people. They could be just chosen by state legislatures. Another important mechanism was large constituencies; they created a tiny House of Representatives. It was 65 members for the entire country.

Compare that to the Massachusetts lower house of the legislature, which had over 300 representatives for Massachusetts. A representative from the Massachusetts legislature represented 1,500 people. A representative in Congress represented 30,000 people. That's 20 times. The point of large constituencies was twofold. One, it was, as you say, to filter ordinary people out of office. There's the era of relatively primitive transportation and communication. In a constituency of 30,000, the only people with large enough reputations to be elected would be a wealthy landholder or perhaps a military hero. You weren't going to get any innkeepers or shipmakers elected to the legislature.

Then the second advantage was creating what I think economists or political scientists would call slack in the agency relationship, meaning that constituents would have a hard time keeping a tight hold on their representatives if you had a geographically vast and very populous constituency. The Framers behind the closed doors of the Philadelphia Convention were so explicit about this. It is another sense in which maybe the word coup is not too much of an overstatement.

They said over and over again during the closed doors of the Philadelphia Convention that the Senate was supposed to be like the House of Lords. The Senate would be the protector of the wealth of the country. Of course, they didn't say that in the ratifying contest. They gave different arguments for why the Senate would need six-year terms in office. They said they needed to accumulate foreign policy expertise because they were going to ratify treaties. Even in 1787, 1788, they understood that calling the Senate the House of Lords and the protector of the wealth of the nation wasn't going to be a winning argument on the hustings.

To what extent were they walking back the promise of the revolution that everyone was created equal? Well, we know they didn't quite believe that. They didn't think women should participate in politics. The person who wrote that owned slaves. What exactly did they mean by it? They meant that Americans were as good as the British, and Americans should have a role in how they were governed, and you shouldn't tax them without their consent.

There are some great letters written while the state constitutions are being written around 1776, 1777 by elite statesmen who are horrified by how far they're moving in a democratic direction. Again, the reason they're doing that, it's during wartime. It's often the case during wartime that countries have to broaden the suffrage, for example, cut back on property requirements for voting, cut back on taxpaying requirements for voting, because how else are you going to mobilize ordinary citizens to risk giving up their lives if they don't have a say in government? That's just always been true in American history.

World War II was the beginning of the Civil Rights Movement because of the role of Black soldiers. Women got the vote in the United States in World War I because of the role they had played in selling bonds and raising money and providing roles as nurses during World War I. The revolution was threatening to run out of control. In a way, the Constitution was clearly a counter-revolution against the egalitarian forces set in motion by the Revolutionary War.

Luigi: I studied this part of history at school in Italy. We don't call the American Revolution a revolution. We call the American War of Independence. Maybe it's because it resonates more with the Italian Wars of Independence. My first question is, was it really a revolution? If the answer is yes, maybe this counter-revolutionary coup was necessary because if it is a revolution, it's the only revolution that doesn't end up in a lot of blood. From the French Revolution to the Soviet to the Chinese, the result had been disastrous. Was it a necessary counter-revolution or not?

Michael: Well, the revolution ends, and Americans don't have any reason to bloody up each other. There was a lot of violence and confiscation against loyalists. Loyalists were the Americans who sided with the British, and there were a lot of them, but they mostly didn't need to kill them. They took away their property. You didn't have a proletarian working class that was advocating redistribution. Most of the people who wanted debt relief were pretty conservative farmers who just didn't want to be taxed out of existence and didn't think they should be paying off this debt that had been scooped up by speculators.

It's not a communist revolution against the elite. The United States never really had that, partly because Teddy Roosevelt understood that you needed some progressive reforms to prevent the country from moving to socialism, and his distant cousin Franklin Roosevelt understood that you needed a New Deal to prevent communism from taking over the country, right?

There's been enough concessions so that you didn't have a revolution of the poor against the rich, and the reason why I think most political scientists would say this is not controversial, the reason why you never had socialism genuinely prosper in the United States is because you had this big divide in the working class, and it wasn't just Black against White, although that was the most salient divide, it was also Catholic against Protestant. It's much easier to mobilize a poor working class in Great Britain, a homogeneous, ideological, unitary working class, because they didn't have the religious differences and they didn't have the racial differences.

Was a counter-revolutionary coup necessary? I think now we're actually getting closer to the point that if we don't do something to make the plot of ordinary working people better, the country is falling apart at the seams, and I think that's going to require dramatic economic reform, and to get dramatic economic reform, you're going to need dramatic political reform. I think if the United States doesn't become more like Northern Europe, more like Norway and Sweden, where you take care of ordinary working-class people so they don't become fascistic, I think we're in a lot of trouble, and we're already pretty clearly in a lot of trouble.

The damage that the Trump administration has done is enormous. I'm not sure all of it is remediable. I don't think you can fix NATO ever. I think the United States has given a tremendous leg up to China. I don't know why any other country would ever trust us in a trade agreement. I don't think you can undermine the brain drain that's going to go on because of the federal government's assault on science and universities. Maybe we'll get one shot to do the dramatic things that are necessary, but if we don't provide free child care, free community college, universal healthcare, I think the country doesn't have a very bright future.

Historically, maybe you didn't need to do those things, but the last 50 years has shown not only the most enormous wealth disparities in history, but also that the wealthy people seem pretty oblivious to the idea that ordinary working people are just not going to take their lives getting worse and worse without resorting to extreme measures. The extreme measure on the right is voting for Donald Trump, and the extreme measure on the left is voting for some sort of socialist redistribution.

Bethany: How much of an overstatement is it to say that you'd argue that all of American history has been the pursuit of somewhat narrow financial interests cloaked in grander aims?

Michael: The Revolutionary War, I think, is fairly seen as Americans not wanting to pay higher taxes and stating these grand principles: all men are created equal, and we believe in human rights and so forth. Basically, Americans were being taxed heavily in the 1760s to repay Britain for the costs of the French and Indian War, and Americans don't ever want to pay taxes. A lot of fight over the Constitution was the two sides saying, if you ratify the Constitution or if you don't ratify the Constitution, your tax is going to go up.

Southern slave owners were fighting to preserve the institution of slavery. Well, it's not all about a financial interest. Slavery is also a social system, but it's largely that slave owners were doing really great. The Northern perspective on the Civil War is a little more complicated because I think most Northerners were fighting to preserve a union, and I don't think that's simply a financial interest, but was it partly a financial interest? Sure. A lot of Northerners were very unhappy that slave owners were dominating the national government, and that was preventing them from imposing high tariffs, which, of course, are financial interests of Northern manufacturers. It was preventing them from building internal improvements with federal money, and of course, that's something very greatly of interest to Northern commercial men.

Yes, I'm a materialist at heart. I think it's a mistake to reduce everything to financial interest because it's pretty obvious that people can be deluded into voting against their financial interests. Why is the White working class now voting two-thirds for a Republican Party that quite clearly is not running the government in their financial interest? Who's driving the agenda of the Republican Party? It's the billionaires who have very clear financial interests in deregulation, tax cuts for the wealthy, and so forth, and it's not that hard to manipulate people.

That's a story as old as time, is manipulating people not to form intra-class coalitions by playing up divisions. It could be divisions between Catholics and Protestants, Whites and Blacks, immigrants and native-born citizens, but that's always in the interest of the wealthy and the well-off to play up those differences because otherwise you get a genuinely redistributive coalition that does the New Deal. For 50 years, you get a dramatic contraction in wealth disparities, and you get the wealthiest, most prosperous middle class in history, and it takes the race issues of the 1960s to start to undo that coalition.

Luigi: If you interpret the Constitution as a reaction to the excesses of democracy of the early constitutions, do you see the reaction starting in the 1980s as a reaction to the excess of democracy in the 1960s? Because Samuel Huntington, in his famous or infamous The Crisis of Democracy, talks about the excess of democracy of the 1960s. It seems similar to me. Am I reading correctly, or am I overreading?

Michael: I think the most plausible account of what happened, there are these people who opposed the New Deal forever. They were never fans of New Deal redistribution. They attacked it as communism, and they got slaughtered at the polls. They ran Barry Goldwater, who was an extreme libertarian, and he got slaughtered even worse. I think what happened was these anti-New Deal reactionaries, very wealthy people like the Koch brothers' father, they decided, "Well, how are we going to get back into power?"

The way to get back into power was to make some of the White working class no longer focus on New Deal redistribution, but rather focus on Black people who were getting benefits from welfare and burning up the cities, and get a lot of the very religious, evangelical, and fundamentalist Christians in the South who are very conservative people but would never vote Republican because of the Civil War, to get them to start focus on religious issues, what we would today call Christian nationalist issues. That's where you get the Moral Majority and the focus on abortion and the opposition to the Equal Rights Amendment.

This is quite a conscious political strategy in which very wealthy reactionary Republicans form alliances with Southern Christian conservatives and racists. It turns out the race issue is not just an issue in the South. It's not just White Southerners who are still defending White supremacy. It's also lots of Northern working class, often ethnics, who don't want their neighborhoods desegregated, don't want their schools desegregated. You see that when George Wallace runs in Democratic primaries in several Northern states in 1964, and he wins 35% to 40% of the vote, or when Martin Luther King goes to Chicago and marches for open housing, and people throw rocks at him.

Martin Luther King says, "I've never seen such hatred in my life, and I've been sent to jail in Birmingham and Selma." An excess of democracy, yes, in the sense that excess democracy gave you the New Deal, gave you the Great Society. Part of the coalition that's mobilizing against that doesn't want those things. Also, an excess of democracy in that you finally turn the United States into a real democracy for the first time when Black people are actually allowed to vote. Race was absolutely critical to Ronald Reagan's coalition, but who's driving it? It's the financial interests that want the massive tax cuts.

You would know better than I, but the top tax rates go down to the high 30s. They had been in the 90s in the 1940s; massive cuts to tax rates, gutting welfare in the 1980s and 1990s. They tried to gut the Voting Rights Act, but they couldn't do it, so the Supreme Court has done it for them. Yes, an excess of democracy in the sense that we now have a democracy where Black people are equal, so we're going to have to do something about that.

Luigi: In my day job, I'm actually a finance professor, so I know that your brother, Seth Klarman, is a very short investor. He's actually a billionaire, and he invests in distressed debt that resemble a lot what the early financiers were doing during the time of the Constitutional Convention. First of all, I would like to be a fly on the wall at Thanksgiving, but how do you go along, and what is the conversation you have at Thanksgiving?

Michael: My brother is my hero because he is one of the most prominent defenders of democracy in the country right now, and I think he does that at some risk. I don't think I want to say more about that. Traditionally, his politics are not nearly as far left as mine, but he recognizes the threat that today's Republican Party poses to democracy and the threat that Donald Trump poses to the rule of law. He is doing great things to try to protect the country, and I don't think for his sake I'm going to be more explicit than that.

We disagree about lots of political stuff. I think some of this is because of our father, who was a Polish Jew who emigrated from Poland in 1929. Most of the family was killed in the Holocaust. I think people with that background probably are a little bit more aware of what's happening in the country right now. I know of people; I have a student whose parents migrated from Romania. They've moved back to Romania because they understand the handwriting on the wall about what's happening in the United States. I certainly hope we don't go that far.

I've written about all the authoritarian things Trump has done, and it's pretty bad. The fact that this has gone on and that the Republican Party has utterly caved, the Framers would be appalled. You have to ask why Madisonian devices for the separation of powers are not working, and the main factor is that Congress is not counteracting ambition with ambition. The Republicans in Congress just lay down and do whatever Trump wants them to do.

Bethany: I really appreciated his nuance and response to our questions about the founding fathers and their views of debt and whether it really was all done just to advantage them. It obviously is nowhere near that simplistic. I think it was important that he pointed out that Hamilton and Madison were not debt owners, and they were not trying to enrich themselves. That's far too narrow and cynical a reading of all of this. He is obviously in a place, overall, that is a pretty extreme place in terms of his fears for the future and his views of where we've gone wrong.

Luigi: I think you pointed in the right direction. There's an incredible disconnect between the balance of his statements in historical context and the lack of balance in his statements about the current situation. I'm not trying to defend President Trump, but I think he takes a very extremist view of everything, and he does it on an historical ground. I think it's an interesting contrast.

Bethany: You could argue that an extremist view is called for now, or you could argue that it isn't. I've actually been thinking a lot about that. The fact that a lot of our history would say that we can get through our current times. Well, it's almost encouraging in the sense that we were more of a mess in those years following the Revolutionary War. We were obviously more of a mess during the Civil War years than we are now. Perhaps you can take some comfort in the historical precedent being one of conflict that we can get through our current times, or perhaps you can take great discomfort in it that we've set the preconditions for where we are today. I'm not sure which is the right argument.

Luigi: You're absolutely right. It's not true that they were more civilized back then. When the debate about ratification came about, they insulted each other in a massive way. At some point, Benjamin Franklin tried to publish in a newspaper that he founded a call for "calm down, guys," and even his article was not published because it was not liked. Things were pretty extreme back then, which is a consolation to say it's not a first and not last time in history that people get very passionate about things.

Actually, they lied and misquoted. They were misquoting somebody, quoting only the first part of a sentence without the second, and misinterpreted what he said on purpose. As even Michael said, when it came to the real reason for certain institutions was not disclosed. There was a lot of deception, if not open fraud. I don't think the world has changed that much.

Bethany: How do you end up thinking about this idea that it really is economics that have shaped the course of our government? I think it's interesting to think about that through the conversation we also had with Adam Winkler about the Supreme Court and about the ways in which the Supreme Court has always been extraordinarily business-oriented.

Luigi: Michael is right in the sense that if you take the extreme bird position, which is a Marxian position, by the way, that everything is determined by economic interests. You're wrong. This said, economic interests play a big role in many decisions, including, I think, the decision to have a constitution that is more republican than democrat. There is no doubt, for example, the issue of paper money is incredibly important. The Shays' Rebellion motivated the Philadelphia Convention, motivated a lot of support for the Constitution.

This is really issue of basically economic interest. I think Michael was very clear in saying this drama of paper money as it's portrayed is not a drama. In fact, it might have been the right thing to do in many situations, but was favoring more the middle class because they were not extreme poor. These are farmers. The middle class, rather than favoring the elite, and the elite did not like it.

Bethany: I think you've argued in the past, and you have felt that more democracy would be better. Do you fear at all this idea that democracy can be tilted over into populism, can become tyranny, or do you feel, after reading Klarman's book and talking to him, that more democracy would be better, that a system closer to the state governments, the state constitutions we had, originally, would be better than what we have now?

Luigi: I think a more democratic system would be better. There is no doubt in my mind. There is also no doubt that the Article of Confederation was not working. What I got from his book, which I think is a very valuable insight, is a small elite understood and saw a major shortcoming of the Article of Confederation, and used this shortcoming to take back some of the concessions they made under duress during the Revolution.

Under duress, they really pushed for a modern-day democracy, at least as far as males are concerned, White males, but the fact that 90% of the people in Massachusetts were voting, this was revolutionary because, until the beginning of the 20th century, most European countries did not even have universal male suffrage, let alone women and minorities, et cetera. It was an enormous step in the democratic direction, and at the state level, the states were working pretty well. The Confederation was not working, and so you needed to overcome the free rider problem, as he said, but I don't think that, for example, relieving from excessive debt, a lot of the farmers, was such a drastic and dramatic action that would undermine the future of the country.

Bethany: Yes, it was interesting, in reading his book, some of the comments that the Framers and others made about how the farmers' indebtedness must be their own fault, that they had lost the character that had once rendered them these noble stalwarts of everything that was American, and had become these dissolute creatures who cared little about the American spirit. It's funny how much of that lingo is reminiscent today, right?

Luigi: Absolutely. Even more so during the European financial crisis. I'm sorry that we ran out of time because I was interested in trying to understand how Europe could have its Hamiltonian moment in trying to get together because Europe functioned very well at the state level, but as a Confederation, it's a freaking disaster because they can't even organize a common defense.

Bethany: That's an interesting question then. Is the European Union more like the Articles of Confederation, and should it be closer to the Constitution? Did someone need to stage a coup and make it stronger, or would you argue that would have been the wrong direction?

Luigi: You need to move forward, and maybe it's not possible to move forward without a coup. That's the interesting question. Exactly like in the United States, the European leaders are much more elitist than any other country individually. They are really technocratic in a way that the single countries are not. I can see a technocratic coup, maybe justified by the threat of a Russia invasion that might bring Europe together. You need a James Madison to pull it off, and it ain't easy.

Bethany: That raises an interesting point, too, that I couldn't help thinking about as I read Michael's book, which is you can't run the counterfactual. I mean, what would have happened if it hadn't been for this coup? Where would we have been? Is the coup, in the end, the best outcome? Well, we'll never know, obviously.

Luigi: We'll never know. Also, the best outcome for whom?

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