How The Founding Fathers Apply To Today's Markets

It’s a day of entertaining marching parades, nation-wide celebrations, and spectacular displays of fireworks!” No, this is not a Greek or Spanish nationalist vision of a Euro exit but the celebrations marking the 236th year of the Declaration of Independence of the United States of America. However, many Americans habitually partake in its celebration without consciously appreciating how its foundations contributed to our nation’s prosperity.

Modern issues, like the Supreme Court’s recent decision on the Affordable Care Act can be difficult because as a nation we often question the wisdom of the founding fathers and their principles as it applies to today’s society. Some questions have been raised in a June 20th post, My Beef With The Founding Fathers and in observance of this Wednesday, I’d like to give my opinion on these questions and try to relate them to today’s financial markets.



Question: Do the founding fathers provide some sort of guiding light towards economic prosperity and social justice?

Yes. They were strongly influenced by current events in Europe and were trained in classical education of antiquities both of which are well documented in, The Federalist Papers. Further, the British and French philosophical movements of the time had a profound influence on the shaping of our country.

• Gershom Carmichael established the basis of Natural Law and John Locke stated that capitalism is its economic expression. He also noted that the government and the people should consent to a social contract setup to protect the individual. Baron de Montesquieu touted the separation of powers and a system of checks & balances. Jean-Jacques Rousseau argued liberty for the citizenry and against the Divine Theory of Kings originated by Calvin Hobbes. He maintained that men were created equal, endowed with a general will, and advocated government by assent.

• David Hume argued that economic freedom is a pre-condition for political freedom and he also believed that property rights generated inequality but could be mitigated through the general will or consent. Adam Smith in his publications, An Inquiry into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments wrote extensively about the productivity of free exchange, social order based on freedom, self-interest, virtue, and the psychology of ethics.


Question: What qualifications or real experience did they have?

I’m only going to comment on Thomas Jefferson but I will venture to say that the remaining founders have similar qualifications and I intend to illustrate him as a proxy for the others.

• Jefferson studied mathematics, metaphysics, and philosophy at the College of William & Mary and at the same time worked as a law clerk for attorney, George Wythe. While there, he was introduced to the Governor of Virginia and impressed him so much that he was invited to weekly dinners to discuss the current affairs of Europe and the advances of Roger Bacon, John Locke, and Isaac Newton. Included in his studies were past monarchs, republics, the relationship of the governed as well as the dis-junct between them.

• He practiced law in Virginia from 1768-1773 and argued a case against the Coercive Acts of 1774, which later became published as A Summary View of the Rights of British America. In 1775, he was a delegate for Virginia in the Second Continental Congress and in 1779 he became Governor.

• In 1785, he then became the Minister to France where he witnessed the French Revolution. Upon his return in 1790 he accepted the Secretary of State position given to him by George Washington. Jefferson then went on to lose against John Adams in the election of 1796 but won the Vice Presidency the following year. Ultimately, in the election of 1801 he then became the fourth president of the United States of America.


Question: Why do we try to apply their principles to the 21st century and expect them to work?

• It has produced the most prosperous nation in human history. The economic principles of Hume and Smith studied by the founding fathers incentivized the great entrepreneurial accomplishments of individuals like Henry Ford and Thomas Edison to pursue their own interests which brought life-changing betterments to society. This applies to the financial markets in allowing producers to engage in activities that benefit themselves and consumers, whether its the production of iPads, the purchasing of FB shares, or just simply shopping at Walmart its the freedom of the market (i.e. people) to engage in commerce as they wish without government interference.

• However, the framework of our economic system is enabled by their study of Carmichael and Montesquieu. Natural Law has provided the ultimate authority of our Constitution as well as system for government with its separation of powers and checks & balances to ensure long-run economic stability. This resulted in a government that has respected its indsutry more so than any other nation. It’s enabled businesses and its people to pursue their happiness and a livelihood that has unlocked the human potential as manifested through our prosperity.

 

The founding fathers of US lived in a quite different time-frame and I really doubt that you can apply their principles in the 21st century without heavy modifications, unless what you wanna do is to find some legitimacy for your opinions. That said, I'm a fan of Hamilton.

 
levelworm:
The founding fathers of US lived in a quite different time-frame and I really doubt that you can apply their principles in the 21st century without heavy modifications, unless what you wanna do is to find some legitimacy for your opinions. That said, I'm a fan of Hamilton.

I have to agree with this comment. The founding fathers faced different issues today (both from a societal and economic stad point). And Hamilton was pretty chill.

 

^ agree

"most prosperous nation in human history" everyone is talking about how complex things and how much attention to detail is necessary to make sound policies, and the core motivation of your lecture is a redicously vague term - "prosperous"? American dont stop to amaze me...

I'd challenge that and say, prosperous for some... and Im pretty sure that China will do better in being prosperous - for some

 

One could argue that it has become the most prosperous nation on earth due to:

  • Having vast amounts of space and natural resources
  • Coming into being at a time when other global superpowers were experiencing a decline (British Empire, Dutch, French etc.)
  • Two benign and friendly neighbouring countries
  • Never having being militarily invaded or fought a war against a foreign body on it's own soil
Asatar:
One could argue that it has become the most prosperous nation on earth due to:
  • Having vast amounts of space and natural resources
  • Coming into being at a time when other global superpowers were experiencing a decline (British Empire, Dutch, French etc.)
  • Two benign and friendly neighbouring countries
  • Never having being militarily invaded or fought a war against a foreign body on it's own soil
These also contributed. I too would take issue with people say it was this one or the other thing. Truth is, there are a LOT of factors that helped to make America what it is.
Get busy living
 
Best Response

Vel sit a dolor commodi incidunt est molestiae. Nihil reprehenderit eum animi. Dolorem necessitatibus consequatur libero non. Nihil dolores sit sit asperiores tempora cum quia.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”