1. Coordination
and the
The Declaration of Independence
The Articles of Confederation
The Constitution

2. The American Colonies under English Rule.
Using the Declaration of Independence, create a list of evidence that suggest that the colonist who signed the Declaration of Independence believed that the English-American relationship resulted in:
Problem Evidence
Abuses of Power by government
A lack of mutual benefits
(a breaking of a contract)
Inefficiency in government.

3. In the Declaration of Independence Thomas Jefferson writes about
Equality under the law. That no person is on Earth to serve another person.
Natural Rights
And Justified Revolution
But there was another purpose behind the document.

4. We must, indeed, all hang together or, most assuredly, we shall all hang separately.
Benjamin Franklin

5. What is this game?
Determine the payoffs for each strategy.
State 2
Stay Loyal to the British
Fight the British
Stay loyal to the British
State 1
Fight British

6. Stag Hunt!!!!!!

7. Win!!!!!! What is this game? Determine the payoffs for each strategy.
State 2
Stay Loyal to the British
Fight the British
Stay loyal to the British
State 1
Win!!!!!!
Fight British
Why was it important that representatives signed their names to the Declaration of Independence?

8. The Declaration of Independence and The Articles of Confederation
State 2
Loyal to British
Fight British
Loyal to British
State 1
Fight British

9. What was the Coordination Mechanism?
Self- Interest
A Contract?

10. Most history classes look at the Declaration of Independence as a document that points out a breaking of a contract.
But how can the Declaration of Independence also be considered a contract between the different colonies?

11. Why was it important that representatives signed their names to the Declaration of Independence?

12. They were showing each other that they were “burning their boats”.

13. Explain how self-interest coordinated each state during the Revolution.

14. Articles of Confederation (1781-1787)
League of Friendship between states
Reaction to British Rule.
States had sovereignty and could establish own laws, currency, and tariffs
States had all domestic power, central government had little or no power.
Congress dealt with foreign issues and debt.
Congress had no power to tax and could only ask for donations.
1 state = 1 vote regardless of size or population
13 out of 13 states had to approve changes
No judicial branch to judge and no executive branch to enforce congressional laws
There was no central power.

15. Spending money but government too poor to operate

16. Articles of Confederation (1781-1787)
States voluntarily donated money but still enjoyed the protections of the central government regardless if they donated.
Rhode Island donated a grand total of $0.00
States did not have to contribute but still enjoyed the external benefits- classic “free rider” problem
In terms of a repeating prisoner’s dilemma the states that did donate realized that it wasn’t worth supporting all of the states and of course would seek their self interest.
states
not donate donate
not 1, ,0
donate 0, , 3

17. Tariffs
Tariff is a tax on a good or service that crosses a border.
There can be tariffs on imports and exports.
During the Articles of Confederation states often imposed inter-state tariffs
Brainstorm a list of outcomes both intended and unintended.
Consider the following:
Impacts on suppliers in the state issuing the tariff
Impacts on the consumers in those states
Impact on choice and competition
Impact on Price
Free Trade
Unity and interdependence.

18. Articles of Confederation (1781-1787)
Complete the matrix
Interstate Trade
State 2
Interstate tariffs no interstate tariffs
Interstate tariffs
State 1
No interstate tariffs
Outcomes?

19. Cooperation between states
Increase choice and competition
Lower prices, higher quality, and less waste
Revenue from tariffs
Domestic businesses helped
Citizens have to pay to buy products from other states
Tit for Tat
Citizens have to pay to buy products from other states
Revenue from tariffs
Domestic businesses helped
Tit for Tat
Cooperation between states
Increase choice and competition
Lower prices, higher quality, and less waste

20. Articles of Confederation
Problems Causes Solution
States did not follow Central Government’s laws
That Central Government had no enforcement power
Increase Central Power
The Central Government had no money. It couldn’t pay debts.
The Central Government had no power to tax
Give the Central Government power to tax
Inflation
Over printing by both the Central Government and state governments
National Currency
Disputes and division among states
States created inter-state tariffs, taxes and navigational rights disputes
National court system, central control of inter-state trade
No trade or treaties with foreign nations and no reprisals against nations that hurt trade
The Central Government had no power to enforce
Make it easier for the Central Government to act
Instability both economically and politically
No Central Power
Increase Central Power
Resources were not allocated to their most useful purpose. The number one dagger in the heart of a free market society is instability.

21. Why were the founding fathers unsuccessful at coordination?

22. What is the overall solution to these issue?
Make a list of cost and benefits with regards to the decision to increase the power of the central government.
What are some methods to prevent the central government from abusing its power?

23. Preventing Concentrated
Power

24. “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny”- James Madison
The principle enemy of both political and economic freedom is concentrated power.”- Milton Friedman

25. Concentrated power has always been the enemy of liberty
Concentrated power has always been the enemy of liberty.- Ronald Reagan
“Power tends to corrupt and absolute power corrupts absolutely.” – Lord Acton
Concentrated power is not rendered harmless by the good intentions of those who create it.
- Milton Friedman

26. If there is only one government or only one specific branch how could it lead to an abusive situation?
If there is only one firm in an industry what can they do to price, if the demand is inelastic?
If there was only one political party how would they shape government?
If there was only one news source how might they shape the news?

27. How can these and other situations be avoided?

28. System Controllers and Feedback loops

29. General Goal of System is Balance.
Give Power
Limit Power
Divide Power
Check Power
Compete for Power

30. Human nature appears to be simultaneously self regarding and other regarding.

31. The great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.
James Madison
Federalist #51

32. Popular Sovereignty
People self rule and give the power to the government.
Examples:
Relate to voluntary exchange and mutual benefits.

33. Limited Government
Government is limited by a Constitution and a Bill of Rights.
Examples:
Relate to voluntary exchange and mutual benefits.

34. Republic
People elect reps. And always maintain individual liberties
Examples:
Relate to voluntary exchange and mutual benefits.

35. Federalism
Government power is divided between central and local governments
Examples:
Relate to Division of Labor and Specialization and Monopolies

36. Separation of Powers with
Checks and Balances
Government power is separated between branches.
Examples:
Relate to Division of Labor and Specialization and Monopolies

37. The great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.
James Madison
Federalist #51

38. Basic Model
General Goal of Founding Fathers: To produce a balanced state (equilibrium) between Authority and Liberty
Voting and elections
Courts
Checks and Balances
Power of Purse
Improper or not prudent
Resentment- demerit
Self Regarding
Others Regarding
Balance
Proper and Prudent
- Gratitude and merit

39. Power Pizza
Freedom Fried
Liberty Cola
If you are willing to give you friend “Nat” the entire “Power Pizza” pie. What will happen?
Big, Slow, Ineffective, powerful. Will expand so much he won’t be satisfied with only pizza. What is next?

40. Popular Sovereignty
People self rule and give the power to the government.
Examples:
Relate to voluntary exchange and mutual benefits.

41. Limited Government
Government is limited by a Constitution and a Bill of Rights.
Examples:
Relate to voluntary exchange and mutual benefits.

42. Republic
People elect reps. And always maintain individual liberties
Examples:
Relate to voluntary exchange and mutual benefits.

43. What can be done to give him enough power but not too much?
Invite his friends State and local and divide the pizza. (Federalism)
National
State
Local

44. Federalism
Government power is divided between central and local governments
Examples:
Relate to Division of Labor and Specialization and Monopolies

45. What can be done to give him enough power but not too much?
National still receives a big slice- maybe too big. What can we do next?
Invite more friends and separate each section. (separation of power)
Legislative
Executive
Judicial
National
State
Local

46. What happens if each group wants more pizza?
With only one slice each level and each branch is going to want more power but they will be checked by the other branches and levels. (checks and balances)
Legislative
Executive
Judicial
National
State
Local

47. Separation of Powers with
Checks and Balances
Government power is separated between branches.
Examples:
Relate to Division of Labor and Specialization and Monopolies

48. What about those pieces of pepperoni that are in between the different slices?
Why would our founding fathers intentionally create a system that may lead to disputes and power struggles between states and the national government and also the different branches?
Legislative
Executive
Judicial
National
State
Local

49. This in theory will slow the growth of government.
By each group pursuing their self interest they offset each other especially when it comes to unwritten powers.
This in theory will slow the growth of government.
Examples:
“Ambition will combat Ambition.”
James Madison Federalist 51

50. What about those items that we are unwilling to give up?
We have a Bill of Rights and super majorities to protect our liberties and freedoms from too much government intrusion.
Freedom Fries
Legislative
Executive
Judicial
National
Liberty Cola
State
Local

51. Republicanism
The People hold sovereignty and have natural rights that are protected against government and the majority.
Additionally, people vote for their reps.

52. “Ambition will combat Ambition.”
James Madison Federalist 51

53. Why were the founding fathers successful at coordination?

54. In your notebooks, create your own model of how the Constitutional Principles work.

55. Does our Government function the way it was intended?

56. 1776
Dec. of Independence
Thomas Jefferson Division of Power
Inspired by Locke
Constitution
Wealth of Nations Division of Labor
Adam Smith and Specialization
economies of scale