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  • Income Inequality and the Founding Fathers

    What did America’s founders say about economic inequality? Rather than unload statistics about the reality of inequality in America today, which we have done on other occasions, this post considers inequality based on the economic principles on which our republic was founded. These principles remind us why economic inequality is not necessarily an injustice, but rather a necessary component of any prosperous society.

    Property Rights

    Far from the notion of merely owning physical property, the founders understood property rights to include “natural rights.” In an essay on property rights in 1792, James Madison wrote:

    He has a property very dear to him in the safety and liberty of his person. He has an equal property in the free use of his faculties and free choice of the objects on which to employ them…Conscience is the most sacred of all property…the exercise of that, being a natural and unalienable right.

    Property rights, therefore, include utilizing our faculties to acquire property, which precedes the ownership of physical property.

    Economic Inequality

    The founders were very aware that protecting the faculties of individuals would lead to inequality. In Federalist 10, Madison said that “From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results.” But is this just?

    Thomas West writes that the first reason the founders understood this to be just is that “property rights benefit all classes equally insofar as they protect the body and mind of every individual from exploitation or enslavement by others.”

    Secondly, the founders knew that protecting individual faculties likely helps the poor if it enables economic productivity that creates more jobs.

    Madison articulated that industry and labor left to their own courses will be directed to “those objects which are most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out.”

    Likewise, Alexander Hamilton noted in his Report on Manufactures that individual faculties organically create a division of labor, which “has the effect of augmenting the productive powers of labor, and with them, the total mass of the produce or revenue of a country.”

    Consider a person who freely uses his own talents to create wealth, like Steve Jobs. The creation of Apple products has led to the employment of tens of thousands of individuals who design, assemble, and manufacture these products; not to mention that each Apple building employs janitors, maintenance workers, landscapers, and others.

    Government’s Role

    Also in Federalist 10, Madison stressed that protection of natural rights is the first job of government: “Diversity in the faculties of men, from which the rights of property originate…. The protection of these faculties is the first object of government.” Any violation of these rights was considered morally unjust. Government also has a role in enforcing contracts, and encouraging and defining ownership of property.

    Throughout the first century of America, government adhered fairly closely to these principles. Even spending on “internal improvements,” or infrastructure projects, was acceptable only if it was in the national—as opposed to the state or local—interest. Aiding the interests of some over others was considered unconstitutional, hence the word “general” in the general welfare clause.

    That’s why in 1822, President James Monroe vetoed a bill that redistributed wealth to a local interest, contending that government spending was restricted “to purposes of common defence, and of general, national, not local, or state, benefit.” This tradition was followed by Presidents James K. Polk and James Buchanan, in 1847 and 1857, respectively. They each vetoed measures that were not in the general interest. Likewise, in 1893, President Grover Cleveland vetoed a $10,000 bill to help farmers in Texas during a depression, stating: “federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character.”

    The Right Focus Regarding Inequality

    America’s founders certainly believed a minimum safety net was desirable. Nevertheless, they would view the current focus on income-growth disparity as misplaced and poisonous. Prosperity is inseparable from economic inequality; conversely, forced economic equality tends toward destitution. The more government attempts to equalize incomes, the less an economy produces. Who wants to produce when one doesn’t receive the full benefits of his or her labor? Founder James Wilson captured it best: “Who would cultivate the soil, and sow the grain, if he had no peculiar interests in the harvest?” The focus should be encouraging people to utilize their inherent rights, rather than discouraging doing so by focusing on differences in income growth.

    Posted in Featured, First Principles, Ongoing Priorities [slideshow_deploy]

    15 Responses to Income Inequality and the Founding Fathers

    1. steve h says:

      Writings on inequality mean a whole heck of a lot when they come from people who owned other people…and found no fault with owning other people as possessions.

      • Bobbie says:

        why would you say something so ugly? how is this productive in any way? Wait! I see where you may be right! Since any some of the 1% are working in government collecting more pay through the people they serve and don't serve, forces greater government possession (control) of the people! Creating the illusion it's 1% of the private sector 99% should hate, which should be up to the 99% of us to take the opportunities to establish our own living. but where any of the 1% is in government, people should open their eyes and look at what government is doing and the sheep not knowing! they don't want you to earn a living, government wants to control your living. The president said he's part of that one percent. Once the money is in government's pocket, it's no longer and less of it in yours. What kind of irrational thinking wants that kind of equality? Break through Americans! It's up to Americans of all shapes, sizes, nationalities and appearances to refute this falseness regarding the irrational manipulation of income equality! Decent people rather earn their money to provide for a living and not be troubled with government applications to survive! please people see it for what it is!

        • Bob Walker says:

          "Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor."

          — Thomas Jefferson

        • Bob Walker says:

          "Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor."

          – Thomas Jefferson

          Even colonial slave-owners knew the score.

      • Rich S. says:

        The fact that Thomas Jefferson owned a slave does not invalidate the entire political philosophy of the founding fathers any more than the actions of a few militant activists would their rights movement of choice.

        If that is your best contribution to this issue, it is beyond pathetic.

    2. xtrdouglas says:

      Very well presented and thought provoking—— Though the OCW have some very good points to their argument about the overall influence of persons that hoard property and wealth—- fundamentally, these simple principles of the forefathers are sound because Government did not play such a huge part in Deciding who the Haves and the Have-nots were in the initial days of our free land.
      If Government stuck to the original core principles of not being Corporatist or IN BUSINESS for itself, then these principles would remain sound even to this day…
      Unfortunately— Government has found ways to expand its SPENDING and expansion capability simply by manipulating free markets and picking winners and losers based on the size of TAX acquisition’s from these institutions— It has also led them to favor giving breaks to the major contributors, because of the Larger share of the PROVERBIAL TAX PIE they contribute, even if it is not in percentage congruence with what other Tax liable companies pay (small business).

    3. xtrdouglas says:

      Next, They Government realized how to manipulate dollar values to suite their purposes and now ridicule China for doing the same thing in their economy. If only GOVERNMENT OFFICIALS were true public servants— and not Career oriented Bourgeoisies that attempt to Climb ever higher and higher into the position of ROYALTY in this country…
      I, there’s the RUBB

    4. Bobbie says:

      No doubt, income inequality motivates greater potential! America stands for the opportunities anyone could make anything they could out of themselves. Race, creed or culture were not matters either way as NOTHING mattered BUT YOU! until the abuse of authority in the present leadership refuses the worth of Americans as individual peoples.

      It's not the role of government to interfere in the incomes of the private sector who aren't tax burdens to society and never the role of federal government. Poverty is the result of governing beyond ones own ability. The interference, expansion and costs of unconstitutional government proves to be the growth of the poverty level and the cause of the elimination of the middle class. America's Constitution! Please stop this!

      There's nothing wrong with the true intellectual interpretation of the founding whose promotion was to self worth rather than an irrational, almost irrelevant and shallow interpretation of self promotion this administration is following.

    5. Bob Walker says:

      Thank you for your insightful research, a good read.

      But if the inequality gets so bad that one or two people have all the money, wouldn't that be bad for the economy? A poker game is over when that happens.

      More to the point, we seem to be approaching that point, and it does not look good for the economy. All indicators seem to point to a lack of access to capital in small businesses. Perhaps we caused this by breaking the "no government leveling of the playing field" rule with the Bush tax cuts to the wealthy. Perhaps not.

      Our founding fathers are very dear to me, but I take care not to confuse them with gods.

      Have a good day,

      • jww says:

        In playing poker there is a limited amount of money which is the way most people look at our money today. If someone has a lot then others must have little as there is a finite amount . Wealth and money are not the same thing. In our Economy money grows it is not limited or finite so if someone has a lot it does not mean that it has been taken from someone else. And as they the poor become wealthier they have not taken it from either the rich or the poor, they have earned it. Wealth envy should not exist because as the poor or middle class become more wealthy how did they do so? If there was a limited amount then they must have get theirs from somewhere? and if that's the case how do they know it came from someone rich and not from another middle class individual making that individual poorer? if wealth were limited and you assume a wealthy person is taking it from you then you must be taking it from a poorer person than you?or If you assume I'm Wealthy and want to get mine watch out someone poorer then you wants to get yours. Redistributing the wealth will not move the economy forward. The Capital is there. Its the fear of the unknown or how are they going to take it from me next that's causing the slow down.

        • Bob Walker says:

          So all we have to do is print more money and hire the poor. that's easy. What was that debt ceiling fiasco about, anyway?

          "Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor."

          — Thomas Jefferson

    6. A liberal will read this article and respond “so you conservatives just think the government should let people starve and die, you are so heartless”. What they will completely miss is that no one is arguing that the State or local governments should not involve themselves in these issues, but that it is not the role of the Federal Government.

      This most basic principle, that the Federal Government should only involve itself in the enumerated powers granted to it in the Constitution, was one of the most important balances of power in the Constitution, and our constant violation of this principle is what has led us to the sorry state of affairs we find ourselves in today.

      Why is the Federal Government involved today in how much water I can use to flush my toilet, what type of light bulbs I use or whether or not I purchase health insurance?

      And yet this same people will complain about the power of special interest groups and lobbyist, without realizing that they are just the natural outcome of the centralizing of so much government power.

      This is also the reason that the founding fathers did not give the Federal Government the ability to directly tax the people, a principle we set aside when we passed the 16th amendment authorizing the income tax. By allowing a central power direct taxing authority we opened the door for the type of corporate cronyism that is so rampant today. Large companies and industries, with the cooperation of those politicians that they essential buy with large campaign donations, are able to use the tax law and regulations to create artificial barriers to entry into their markets in order to stifle competition.

      However, the answer to this problem is not to pass more government regulation, that approach only gives the Federal Government even more power. The answer is to remove the power of direct taxing from the Federal Government. We should repel the 16th amendment and return to apportionment, thus allowing the States to come up with 50 competing tax structures in order to fund the federal government.

      Further, this would give the incentive for the States to have a more active role in determining exactly what the Federal Government should be spending money on. If it is up to the States to raise their portion of the budget, they are going to be more inclined to keep the Federal Budget small, so that they can spend their State tax dollars in THEIR state.

      The bottom line is we have allowed the Federal Government to expand way beyond the original intent and purpose envisioned by our founders and we are seeing the negative results of that today.

    7. Pingback: FRC Blog » The Social Conservative Review: November 17, 2011

    8. Jim Kress says:

      God creates us equal. Maintaining that equality, or exceeding it, is OUR RESPONSIBILITY, through personal hard work, education, employment, thrift, and diligence.

    9. Bob Walker says:

      I pledge allegiance to the banks
      Of the oligarchy of America
      And to the plutocrats who seized control
      One nation, recently sold
      With liberty and justice on hold.

      It just doesn't sound right.

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