Hamilton’s Blessing Analysis

Hamilton’s Blessing Analysis[pic 1]

        Throughout “Hamilton’s Blessing” a reoccurring theme seems to prevail time and time again. This reoccurring theme is simply debt can be a beneficial political and economic asset if utilized properly. This idea stems from Alexander Hamilton. Hamilton essentially sees an opportunity to capitalize from the debt the United States is born into. Throughout the six chapters in “Hamilton’s Blessing” Gordon goes into great detail of how debt can hurt and benefit our nation. The idea capitalizing off our debt works well, but when confronted with reluctance to make difficult decisions, it crumbles rapidly. Gordon supports this through numerous historical examples backed up thoroughly with explanations. Gordon’s explanations and reasoning can be backed up by James M Buchanan, the author of “Democracy in Deficit: The Political Legacy of Lord Keyne”.  

        James M Buchanan is a well-established author who has written many books regarding the financial history of the Unites States. Buchanan’s book “Democracy in Deficit: The Political Legacy of Lord Keynes” and Gordon’s “Hamilton’s Blessing” both represent a traditional interpretation on the economic and historical era from 1776 to present day. Buchanan is a strong believer in Keynesian economics as well as Gordon. One example of Buchanan’s support is in his third chapter when he says “it would, indeed, offer grounds for short-term optimism if the policy disasters we have witnessed could be imputed squarely to either the deliberate machinations of corrupt politicians or the folly of the unwise. We fear, however, that such an imputation would simply be escapism.”. ^[1] This quote directly relates to one of the three flaws Keynesian economics had. Gordon describes this flaw as “human nature”^[2]. Both Buchanan and Gordon strongly agree with Keynesian economics. They along with many others believe that in the short run, output is heavily influenced by aggregate demand. They also recognize the major flaws it had as well. During this time period in history Keynesian economics was essentially portrayed by Gordon as the new way of thinking. If a politician did not believe in macroeconomics, it was fundamentally seen as political suicide. Buchanan also supports this belief and dedicates a whole chapter to this topic. He mainly focuses on the democratic party because they had control of the government for around sixty years. During the time they were in control Keynesian economics was  essential to know. Keynesian economics is just one of the many similar topics reviewed by both of these knowledgeable men.

        Furthermore, throughout Gordons six chapters many subtopics seem to weave their way into his overall big picture. Gordon’s big picture of how debt can benefit our country economically and politically is distinguished by a flat income tax, removal of Political Action Committees, and the monitoring of federal spending. These subtopics are broken down so intricately to back up Gordon’s point. Basically Gordon wants to show how America was born into debt and still incurs debt today, but it is up to the people to prosper from this debt. With that in mind Alexander Hamilton is the building block to this whole ideology of profiting from debt. Throughout the early stages of America, many people feared a strong centralized government. Hamilton on the other hand realized the country needs to generate some sort of revenue because of all the debt we incurred from the war. Hamilton comes up with his “Report on Public Credit” to try to resolve this problem. Hamilton proposes a centralized bank, and the use of our national debt to create liquidity and a large flexible money supply. Everyone is terrified of a centralized bank but it is passed into law by George Washington. After this point throughout the next few hundred years, the government imposes taxes on the citizens. These taxes start off small like the whiskey tax, and develops into this intricate system which is still being revised today. Gordon seems to strongly dislike the income tax system throughout the whole book. He is angered how at first when the income tax is implemented, it seems to heavily impact the lower to middle class of our nation. Gordon brings up the point how a direct tax is unconstitutional but overall this tax seems to be directed toward these two lower classes. It is not until President Taft is elected that a personal income tax is implemented along with a two percent tax to corporations. This two percent tax is essentially a tax on the rich without saying it. This still wasn’t good enough for Gordon. Gordon finds this to be inadequate because Taft should’ve merged these two taxes together. Instead of the wealthy being affected by this tax, they have the money and resources to find loopholes within the law. Gordon portrays the wealthy to almost be benefiting from this tax implemented on them. The income tax continues to change before, during and after war, recessions and depressions. Gordon isn’t satisfied because he supports a flat income tax because of its simplicity, it eliminates double taxation, and it doesn’t discriminate. Gordon hints to the simplicity when he talks about the IRS pairing W-2 forms from 300,000 people compared to millions of people with the new tax system.^[3]. Gordon’s main reason for his dislike towards the income tax is because it’s simply unfair. He would like to see a flat percentage that everyone is taxed. Taxes play a huge role in Americas economic history and will continue to do so for many years to come.

        In addition to a flat income tax rate, Gordon also wants to see the Political Act Committee abolished. This really angers Gordon because he doesn’t like the fact that politicians can receive money for campaigns or political favors. Gordon says, “Why are there now debt service costs of more than $1,000 per American per year? Because, debt has served 'the political self-interests of a few thousand people.''^[4] What Gordon is getting at here is the fact that over a hundred years ago Hamilton was using the debt to benefit our nation, but now a few are reaping the benefits that debt has to offer. Gordon accuses politicians of taking money in exchange for voting for certain bills. He is upset by this and doesn’t come out and say it but hints towards the idea of career politicians corrupting our system by turning a job that should have terms into a career lining their pockets.^[5]. Overall Gordon is strongly dissatisfied with the way the Political Act Committee was able to take money from people to fund their campaign.