Economic Freedom and Constitution

Dr. Sankarshan Acharya
University of Illinois (U.S.A.)
and Research Center for Finance and Governance (India)

November 4, 2010

 

As written in memos to the new leader (to be Speaker) of the U.S. House of Representatives, Mr. John Boehner, the Great Recession must have ushered in a new dawn in America: rekindling of the spirit of economic freedom enshrined in the constitution.

Mr. John Boehener uttered after the annoncement of election results on November 3, 2010 his longing for "economic freedom" under the "constitution," I told my family to take note of the common longing of people expressed through their democratic franchise. But they wondered about my remarks on Mr. Obama too echoing the common longing of people for economic freedom.

The verdicts of 2008 and 2010 convey the same message as contained in my latest response to President Obama, dated October 30, 2010 vis-avis my research on an economic paradigm for constitutional governance:

"You have always spoken about enacting the right policy. But how to determine what is right? President Bush too had stated that he was acting rightly.[1] The current partisan confrontation is about how to judge what is right. This is where my economic paradigm for constitutional governance is necessary because every American has sworn to uphold the constitution.

"I believe you could still revitalize your presidency if you are prepared to embrace the constitutional economic paradigm. This will likely cost you the support of powerful interests even in your party. But you will garner the support of the vast majority of people, which will result in a strong bipartisan support for constitutional policies.

"The response of Main Street to my constitutional economic paradigm is overwhelmingly positive with hundreds of downloads of the paper from the internet website, Pro-Prosperity.Com. Some have openly branded me as 'patriotic.'

"The Chief Editor of a prominent journal on constitution has just written: I do not doubt that the general topic of your paper (as I understand it-the nature of a 'financial constitution' that offers equal protection) is appropriate for consideration for possible publication.

"Top journals of economics and finance that should publish this paper have, however, rejected it without reviews and sometimes with a refund of submission fees, indicating their anger towards a mere messenger of the truth.

"Many of my colleagues have appreciated how this research works for all, though it perversely blocks my 'rise' within the profession. Even my students are copiously praising the constitutional economic paradigm, as they see how the discovered truths have unfolded in the real world exactly as presaged and how the proposed Safe Bank policy could have averted the crisis. I am gathering the feedback of Main Street on the constitutional economic system. "

When I received an email from Senator John McCain, recently, stating that I was in a "selected group" to campaign against the current policies, my response was that democracy-longed by people everywhere-must urgently adopt the economic paradigm for constitutional governance to thwart the unprecedented challenge from the state-sponsored nondemocratic capitalism.

What has gone wrong with democratic capitalism?

The founding fathers have scripted a constitution for a free market economy to offer equal protection of everybody's earned capital, which is necessary to induce production, innovation and creativity to keep the United States ahead of others. This is the essence of a free capitalist economy dreamed by the founding fathers.

Is the prevailing American economic paradigm fulfilling the dream and vision of the founding fathers? No.

The existing economic paradigm cannot claim if certain government policies it advocates are constitutionally efficient (to preserve earned capital and enhance national competitiveness) because the paradigm itself is not based on the fundamental tenets (axioms) of the constitution. The existing economic paradigm is unconstitutional. It is prone to cause great depressions and recessions.

The proposed new economic paradigm for constitutional governance has evolved through selfless research since 1989, when I was an assistant professor at the NYU and then as a financial economist at the Board of Governors of the Federal Reserve System and
continued as an associate professor at UIC.

Based on the constitutional tenets, the new economic paradigm yields a general equilibrium for a constitutionally mandated free market economy to offer equal security to everybody's earned capital to fulfill the dreams of the founding fathers.

Voiding the constitutional tenets within the new economic paradigm yields the same current policy: unconstitutionality and inefficiency of the Federal Reserve Act and FDIC, and the SEC's Short Selling Rule advocated by the prevailing unconstitutional paradigm. If the constitutional tenets are kept intact within the new economic paradigm, however, the SEC's short-selling rule as well as FRA and FDIC become inefficient and unconstitutional.

The current economic paradigm has produced neither a small nor a smart government. The new economic paradigm is necessary to
formulate constitutionally efficient and smart government policies for achieving financial liberty of We the People as well as for thwarting the serious challenge stemming from nondemocratic state-sponsored capitalism.

Readers should feel free to circulate it among all political leaders to facilitate a faster adoption of the constitutionally efficient economic policies for prosperity amid stability of the nation and for preservation of the commonly longed paradigm of democratic capitalism.

 

[1]After receiving my letter, entitled, "Enhancing American Competitiveness," (http://pro-prosperity.com/USPresident013105.html) in early February 2005, President Bush – as per news reports – (a) created for the first time a White House Budget item American Competitiveness, with a budget of $5.6 billion (is this correct?), (b) made a volte-face on his war strategy by publicly announcing in April 2006 that he did not intend to invade Iran, although his plan had already leaked and published in The New Yorker, (c) befriended India by offering nuclear technology in July 2005 that surprised even the Indian officials at the time, (d) went to Stanford U to mollycoddle scientists and researchers in September 2005 (the students did not let him enter the campus and so he spoke at the gate),(e) ordained production of ethanol-based gasoline (the strategy did not work), (f) created a White House webpage to reduce American obesity, and (f) hired a Great Depression expert to head the Federal Reserve and a Goldman Sachs CEO to head the Treasury to force bank holding companies to have their consolidated capitals exceed the regulatory minimum, as per my research about which I received a "thank you" note from the Treasury.