April 17, 2020
States’ Rights: It’s been 233 years since delegates to the Constitutional Convention spent a warm summer in Philadephia debating the central issue of our new system of government: would the federal government or the states have more power. Recent news from Washington, D.C. indicates that the debate still goes on, as indicated in this excerpt from Tuesday’s Wall Street Journal:
WASHINGTON—A brewing showdown between President Trump and the nation’s governors is setting the stage for a clash between federal authority and state authority unseen in modern times…The structure of the U.S. Constitution reserves considerable powers to the states. Byron Tau April 14, 2020 (emphasis added)
Many convention delegates (Federalists) believed that the federal government should be able to overrule state laws, but others (Antifederalists) feared that a strong federal government would oppress their citizens. The Constitution was designed to deter the abuses of power that the colonists had grown weary of under the heavy hand of the English Parliament.
After months of heated debate (figuratively and literally) on this and other issues, what was adopted on September 17, 1787 was a document that would “form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…” The subsequent adoption of the Bill of Rights (the first ten amendments to the Constitution) safeguarded individual liberties, and the powers reserved for the states.
Opening the economy: At the moment, it appears as if the President will not hinder the governors from making their decisions based on evolving conditions in their states. States’ rights prevail! Although there will certainly be more COVID cases, waiting for a vaccine isn’t a practical option. Greater public awareness, personal responsibility, promising treatments (Google Gilead’s remdesivir announcement on April 17!), and widely available testing should enable Americans to get back to work, enabling our economic engine to sputter back to life. Once a vaccine arrives, most industries should be able to move to full throttle.
Caveat: If some states choose to extend their lockdown and trample the Bill of Rights, don’t be surprised if “Parliament” weighs in!
Stimulus checks: We have confirmation that checks have been arriving via direct deposit to the bank accounts of some clients. For those that receive checks, make sure to put it to work in the economy. If possible, support local small businesses. $100 spent at a restaurant continues to move through the local economy: raw ingredients are purchased from wholesalers who purchase from growers who purchase from grain suppliers who purchase a meal back at the restaurant. Money is the fuel for the economic engine! Like a stone tossed in a pond, the ripples move out in all directions.
WorldWatch XXVI Target Dates! Once we see how the reopening of the economy is progressing, we will be able to firm up a date. At the moment, we are targeting for late September / Early October. A coincidentally ideal date could have been Thursday, September 17 which is annual Constitution Day!
There is a story, often told, that upon exiting the Constitutional Convention Benjamin Franklin was approached by a group of citizens asking what sort of government the delegates had created. His answer was:
“A republic, if you can keep it.”
Well, we have managed to keep it for 233 years, which is not yet even one-half of the nearly 500-year duration of the Roman Republic (509 BC – 27 BC).
Richard J. Volpe, CFP®, CLU®, ChFC®
Founder and President