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On the latest episode of GoodFellows, senior fellows John Cochrane, H.R. McMaster, and Niall Ferguson, moderated as always by distinguished policy fellow Bill Whalen, speak with their colleague Michael Auslin, a distinguished research fellow at the Hoover Institution.
Auslin is a historian and the author of National Treasure: How the Declaration of Independence Made America. Published earlier this year, this fascinating work explores the history of the Declaration of Independence not just in the eighteenth century, but across the long arc of American history.
In the second part of the show, the GoodFellows discuss the upcoming midterm elections, national security threats amid the Iran war, and how swelling national debts are constraining governments on both sides of the Atlantic.
Quote of the Day
Michael Auslin comments on the contingency and the uniqueness of the American Declaration of Independence:
In a way, the whole thing was contingent because no one had ever done it before. There’s no roadmap. There’s no Robert’s Rules of Order. There’s certainly no constitution you’re going to follow, no precedent really at a national level. And people forget this was happening as much at the colonial level, meaning inside the colonies, as it was in Philadelphia. We all sort of focus on Philadelphia because we know the end of the story and we know where we are: That you have this powerful central government [today]. But back then it was really the colonies which were the drivers. And that’s why Thomas Jefferson, for example, he didn’t want to write a Declaration of Independence. He wanted to be home in Williamsburg writing a constitution for Virginia because he thought, as everyone did, this is where the power was going to be held.
The Central Issue: Was America’s Declaration of Independence Unprecedented?
Niall Ferguson probes the extent to which the American colonists’ Declaration of Independence from Great Britain was truly unprecedented in world history, and whether the Founders took any inspiration from prior political revolutions:
Can I be awkward and challenge the idea that this was entirely original and unprecedented? After all, the Scots declared independence from England in 1320 in the declaration of Arbroath. Was there no awareness? I’m sure there was, on the part of the founding fathers, that they weren’t exactly the first people to declare their independence. The Dutch had declared their independence from Spanish rule, too. It wasn’t the first republic that ever was established by revolution. Talk a bit about the sense of historical precedence.
To which Auslin responds:
It’s what R.R. Palmer called, half a century ago, the “age of revolution.” And there’s no question that others had begun on this path in very local and specific circumstances. I think for the Americans, what was different for them was, first of all, the idea that they would be separating themselves. . . [and] severing, at least politically, the bonds that had connected them to Britain, leaving them all alone, this thin strip on the continent was at the same time too large and too small. . . . Really what haunted them was the failure, as you noted, Niall, of all these republics in the past, whether it was the Hebrew Republic from the Bible or, of course, Rome in particular as the great lesson about the inability of free people to maintain virtue, and what they called “republican virtue,” and to put the polity above the self. So I think their concerns were the scale, the size.
Key Takeaways
Could there be an “October surprise” lurking in the financial system?
John Cochrane sees a few possible sources of risk:
“October is the season of financial surprises. . . You can’t forecast those. Let me introduce you to the random walk, which is pretty much how markets behave. But there are some fragilities out there. France seems to be imploding with the European sovereign debt markets. That could be an interesting case for Europe. I don’t know how that really affects us. The tech stocks are very richly valued, sort of looks like 1999, and people who study this tell me that there’s more debt involved. A stock market crash isn’t by itself a problem, but when there’s debt that goes bankrupt. . . that may reach back to banks and other institutions, [and] that could be unpleasant if it hits.”
Niall Ferguson agrees that current market and fiscal conditions (namely, high levels of government debt), in the United States as well as in Europe, give reasons to be cautious:
“October is indeed a dangerous month in financial history, and it’s especially nerve-wracking when the stock market is at near record highs. . . It’s not that broad-based, it’s concentrated in relatively few stocks. But the big story in a sense is already unfolding and that’s in the bond market, isn’t it, John? And when you see these big moves in 10-year [bond] yields, not only in the US but in Europe, in that respect, the surprise is underway. We’ve already mentioned France. The French fiscal position is looking very precarious. They have a large deficit, pretty large stock of debt. They’re heading towards presidential elections where the far right candidate is likely, though not certain, to win. I think that’s where a lot of the action is going to be, not only this month but beyond because interest rates are returning to where they were 25 years ago on the eve of 9/11.
But the stock of debt in that 25-year period has gone up massively. In the case of the US, the debt-to-GDP ratio has gone up by a factor of three. And so the world is getting those interest rates that it hasn’t seen for 25 years, with a much larger stock of debt. And I think that’s what to look at.”
Would Iran consider launching a terrorist attack against the United States?
Former National Security Advisor H.R. McMaster acknowledges the possibility, but suggests that such an attack would likely galvanize American resolve and “blow back” on the Iranian regime:
“Well, I think something like that, I would hope, would bring Americans together. But what you do see is this continued threat from Iran that has morphed from sleeper cells that the Iranians have deliberately placed in Europe, tried to place in the United States, to the Russian model of paying off some thugs to conduct these kinds of attacks. They’ve tried in the past in the United States. Remember the assassination attempt against the Saudi Arabian ambassador to the US? They were supposed to kill him in Cafe Milano in Georgetown [Washington, DC]. It’s not unprecedented, but I think it would blow back on them. We saw this really ridiculously long letter that the Iranians wrote to the American people that was an effort to divide Americans further. But again, I think they have this perception that we’re weak, we’re decadent, we’re divided, but I don’t think we’re as divided as we look from the outside.”
Recommended Reading
The GoodFellows recommend National Treasure: How the Declaration of Independence Made America by Michael Auslin.
Bill Whalen also recommends Auslin’s Substack, The Pawtomack Packet.
Parting Wisdom
Michael Auslin, responding to H.R. McMaster, discusses why there came to be a “significant social and cultural distance between the monarchy [in Britain] and the King’s colonies in North America,” ultimately leading to the American Revolution:
It was distance that allowed the Americans to begin creating what they considered their free institution, starting, by the way, with the real 1619 project, which was in Jamestown and the election of the first popularly elected assembly. That’s really the beginning of the American democratic experiment, where they realized that they were going to have to govern themselves. By the time you get to 1776, it’s 170 years old, 160 years old. So to [the colonists], they had been on their own for a very long time.
That wraps up this GoodFellows conversation guide. If you like this companion to the show, or have any recommendations for future conversation guides, please let us know in the comments below.
John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution, Stanford University. An economist specializing in financial economics and macroeconomics, he is the author of The Fiscal Theory of the Price Level. He also authors a popular Substack called The Grumpy Economist.
Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution, Stanford University. He is the author of sixteen books, including The Ascent of Money, Civilization, and Doom; columnist with the Free Press; founder of Greenmantle; and co-founder of the University of Austin.
H. R. McMaster is the Fouad and Michelle Ajami Senior Fellow at the Hoover Institution, Stanford University and distinguished visiting fellow at Arizona State University. He is author of the bestselling books Dereliction of Duty, Battlegrounds, and At War With Ourselves.
Michael Auslin is the Payson J. Treat Distinguished Research Fellow at the Hoover Institution and the author of National Treasure: How the Declaration of Independence Made America (Avid Reader Press/Simon & Schuster).