THE CURRENT SOCIAL CONTRACT
by Frank Forman

Just what is the current social contract?  Organizing
change at the constitutional level is notoriously
difficult, and it will be that much more difficult if
we cannot agree on what the present consists of.  Is it
a matter of current holdings, or is it a matter of
expectations?  How is risk aversion handled?  What
about emergencies?  I shall consider all these
questions and how different answers to them make
agreement on constitutional change more difficult. 

First of all, consider the adoption of the Wicksell-
Buchanan [See Knut Wicksell, _Finanztheoretische
Untersungen_ (Jena: Gustav Fischer Verlag, 1896), and
James M. Buchanan, _The Limits of Liberty: Between
Anarchy and Leviathan_ (Chicago: University of Chicago
Press, 1975).] rule that a five-sixths majority be
required to pass federal legislation.  This would mean
that a great deal of legislation now on the books would
never be enacted or would be funded at a much lower
rate.

If we all held a purely contractarian view of
government, perhaps a five-sixths rule would be enacted
into the Constitution.  At least the great Knut
Wicksell thought this was a sound estimate.  But the
fact is, no one seems to hold a purely contractarian
view, the view that government is fundamentally a
matter of exchange and bargaining over what the
government produces.  Most of us hold some version of
the truth model of government, [Buchanan has written on
this theme a great many times.  For an extended
discussion, see "Sources of Opposition to
Constitutional Reform," in Richard McKenzie, ed.,
_Constitutional Economics_ (Lexington: Lexington Books,
1984, pp. 21-34.  Reprinted in James M. Buchanan,
_Liberty, Market and State: Political Economy in the
1980s_ (New York: New York University Press, 1985), pp.
55-69.] that we know in truth what the government ought
to do, or refrain from doing, that transcend the give
and take of politics.  The truth model claims we can
know the truth about the good, while the contractarian
model only speaks of different wants of different
people.  It will be easier to negotiate constitutional
changes when the government is seen only to be
producing public goods to satisfy preferences than when
there are higher truths involved.

EMERGENCIES

During emergencies, or so-called emergencies, the truth
model of government takes the upper hand.  In fact, the
country has been in a state of emergency for over fifty
years, as special powers granted to the executive
during World War II have never been repealed.  Right
now, for example, it is difficult if not impossible to
get property illegally seized by the government back,
particularly with respect to the War on Drugs.

The emergency mentality is widespread, and not just in
genuine emergencies.  In the bad old days of the Cold
War, no consensus on a Wicksell-Buchanan five-sixths
rule would have been possible, since the Anti-
Communists thought that the level of military spending
that would have emerged under this rule would be so low
as to make for a global victory of Communism.  These
Anti-Communists would have wanted an exception to the
five-sixths rule when it came to the military.  Even
today, there are plenty of people who see the world in
a state of CRISIS!! and still demand an exception for
military spending.

There are also those who see poverty, the inner cities,
and many other egalitarian matters as emergencies
severe enough to want exceptions to the five-sixths
rule.  Indeed, there are probably few programs that
someone does not want an urgent exception for.  If dire
emergency is not the issue, then it is the truth model
of politics: the things I want the federal government
to do are a matter of truth--truth about the good
government must do--not matters for compromise in
bargaining over the Constitution.  Indeed, if it were
put to me, I'd advocate a *one*-sixth majority rule (if
not to let me alone decide the amount of appropriate
funding) for my vision of political truth.  Not very
many would come out and say they ought to have their
own way, but the truth model implies it, that I
personally have the truth.

EXPECTATIONS

Now sweep all this aside, the emergency mentality and
special access to the truth.  A federal five-sixths
rule would greatly reduce what could be collected from
Social Security.  True, the individual states could
pick up the tab, and they will have more post-federal-
tax income to tax.  Yet the states have pretty much
reached the limits of their ability to tax, owing to
voting by foot, as well as to a growing resistance to
taxation, whence it becomes likely that federal plus
state Social Security would be substantially lower than
it is right now.

What goes for Social Security goes for all other
aspects of the national debt, construed broadly to
include whatever people expect to get from the federal
government. (By comparison, traditional interstate
externalities, such as air pollution, are rather minor,
and I have never seen an estimate of them in the
aggregate, which lack of estimate leads me to think it
may be on the order of two percent of total economic
output.)  So the chief question, once again, is what
does constitute the status quo social contract with
regards to expectations.  The difficulty is that men
are mortal.  Men unborn will have to pay for things
they have never consented to.  Perhaps we can say they
consented to having some form of government, but from
that bare fact we cannot say they consented to the
present Constitution, much less to its accretions since
1789.  We might be able to say that they would consent
to a renegotiated Constitution, which we may, for the
exercise at hand, suppose to include the five-sixths
rule.  This rule, whether five-sixths or not, would
hold in perpetuity:  everyone, placed behind a veil of
ignorance about *which* future generation he will be
born into, will agree to shoulder previous debts in
return for his generation's running up yet more debt
for generations to come. [See Frank Forman, _The
Metaphysics of Liberty_ (Dordrecht: Kluwer Academic,
1989), pp. 92-5.]

Ignoring problems with the veil-of-ignorance
construction, men are going to change their ideas about
the social contract as time goes on.  After all, the
social sciences are far more a series of buzz words
than hard science.  (Witness all the clamor over chaos
theory, catastrophe theory, and fractal geometry.  This
is swell stuff, but the underlying processes that
generate such phenomena in the social world are never
specified.)  We might well reach a semi-consensus over
the Wicksell-Buchanan rule, but future generations will
come up with a different percentage.  Besides,
accepting any specific supra-majority rule supposes an
additional consensus over the *scope* of government,
and about this there is no consensus at all, except
perhaps for the right of the people to petition the
Government for a redress of grievances.

PHASING IN THE FIVE-SIXTHS RULE

Now, as it happens, the debt of government will not be
paid solely by the yet unborn.  *They* may opt for the
five-sixths rule.  Wicksell and Buchanan might want the
rule to go into effect now.  But most of us are not
ready for something so drastic.  The solution may be to
phase it in gradually, say at 1/2% a year.  It would
take 66 2/3 years to go from 50% to 83 1/3%.  This
would give those being born today a whole working
lifetime to save for their retirement.  This should be
long enough.

Suppose, instead, we phase it in at 1% a year, allowing
33 1/3 years to implement the five-sixths rule.  Would
this be too fast?  Probably not for someone entering
the labor force, but for someone exiting it, this would
mean that his Social Security payments will be reduced
from the current level to that passed under a 60% rule
in 10 years.  I have no estimate of how much this
reduction would be, nor how much the states would pick
up the difference, but I would expect resistance for
the more rapid phase-in (1% a year) from those near the
end of their working lives.  Resistance will also come
from other taxeaters and from all government employees,
regardless of age.

But consider this:  over the past third of a century,
the social contract has been *effectively* violated in
the direction of *decreasinf* the required percentage
needed to enact federal legislation.  True, this change
appears in no formal document, but it has happened
nevertheless.  What has happened is that the technology
for amassing pressure groups has exploded.  As everyone
knows, the Founding Fathers deliberately made the
process of enacting legislation difficult:  rather than
require a simple majority of all the people, they
established a bicameral legislature of representatives
(not voters directly), one house represented roughly in
proportion to population and elected by popular vote,
the other with equal representation of the states and
elected by the state legislatures.  Concurrence of both
houses and also the president was necessary to get a
law enacted.  This may have been optimal in 1789, but
the much better technology of forming pressure groups
(with all their attendant logrolling) that has arisen
since then (esp. in the last third of a century) has
greatly shifted the resulting (equilibrium) size of
government.

So, without any real evidence, but equally without fear
of contradiction by evidence, I claim that the Founding
Fathers knew about pressure groups and instituted the
bicameral system to make sure that an effective 50%
rule (50% without logrolling) would be met.  Technology
has reduced this 50% to a one-third minority.  To bring
it back to true majority rule, a two-thirds majority
rule needs to be instituted.  But since the *scope* of
government has expanded spontaneously, albeit
gradually, but still without explicit agreement, this
means (broad estimate!) that we have an effective
*one*-sixth rule, under the original scope of
government as intended by the Founders.  This is not
strictly true, since even a one-sixth minority in 1789
seemingly could not have passed legislation in areas
understood as going beyond the scope of government as
it was conceived then.  I say seemingly, since Congress
under George Washington's presidency slapped a whiskey
tax on western farmers.  The farmers thought such
inland taxes were illegal and staged the Whiskey
Rebellion against them. [See Thomas P. Slaughter, _The
Whiskey Rebellion: Frontier Epilogue to the American
Revolution_ (Oxford: Oxford University Press, 1986).] 
Maybe they should have had a two-thirds rule back then! 
At least, by 1861, the Confederacy thought so, since
their Constitution required a two-thirds majority for
all appropriations not initiated by the executive
branch. [See Randall G. Holcombe, "Constitutions as
Constraints: A Case Study of three American
Constitutions," _Constitutional Political Economy_ 2.3
(1991 Fall): 303-28, and "The Distributive Model of
Government: Evidence from the Confederate
Constitution," _Southern Economic Journal_ 58.3 (1992
January): 762-9.]

Nevertheless, an expanded scope of government is
popular today, and this might argue for a two-thirds
rule.  It might be five-sixths, given the Rebels'
understanding of the problem of keeping the scope of
the central government in check *and* the technological
increase in the ability to form pressure groups.  But
this goes back to two-thirds, given the *current*
popularity of an expanded scope of government.  To push
it back up to five-sixths, we should have to presume
the current popularity is misguided and that, as Public
Choice scholarship about widespread government failure
further diffuses, the consensus will shift to a five-
sixths rule over the 1/3 or 2/3 of a century as the
voting rule gradually increases by 1% or 1/2% a year.

THE ENTITLEMENT MENTALITY

Yet there is something else to overcome in reaching
agreement on constitutional change, namely the
entitlement mentality:  whatever I've gotten from the
government is mine to keep.  I come to regard it as my
property.  Now, the sense of ownership is part of our
mammalian heritage and may well go back to reptiles and
fishes.  We even find a proto-contractarian mentality
in non-human animals.  But in man, concepts of property
have become highly abstract, giving rise to a large
body of law, both statute and (spontaneously evolving)
case law.  That it would extend to entitlements from
government should be no surprise.

But there is a paradox here, if we push out the concept
of ownership to a still more abstract level.  Consider
a Federal bureaucrat who became a taxeater during the
Great Society years.  Back then, it was reasonable for
him to expect that his share of the public fisc would
not remain constant but would accelerate.  He looked
forward not only to rising salary *schedule* but to
easy promotions within that schedule, a phenomenon
known as "grade creep".  Today, grade creep continues,
but not like it did before.

Well, in one sense, that's tough:  he simply made a bad
career choice, in the sense that, had he known that
grade creep was going to decelerate, he might not have
opted for a federal career.  What counts for
constitutional change, however, is not whether you or I
are sympathetic with such a bureaucrat's plight, but
rather his own subjective preferences.  After all, if
unanimous consent to a change is required, his consent
is too.

These are all semi-educated guesses, and I'm trying to
keep my own robust near-libertarian preferences out of
the picture.  Still, we have to deal with the
entitlement mind set.  Of course, men want to keep
their property and have neither their things stolen nor
their agreements violated.  Again, other mammals, and
perhaps even reptiles, also have a sense of ownership.
[There are many books on this subject.  Perhaps the
best known is Robert Ardrey, _The Social Contract: A
Personal Inquiry into the Evolutionary Source of Order
and Disorder_ (Patterson, NJ: Atheneum, 1970).  Mass
paperback reprint: New York: Dell, 1974.]  But men can
claim ownership on future generations as well.  A man
can own stock in a company that will survive his death,
and he can also own a piece of government debt.  Even
more, he can feel entitled to government transfer
payments and insist that such payments continue at the
level to which he has become accustomed.  He gets
indignant at any cuts, even if they come from a
government that had violated the social contract, as
has arguably happened under what I have guessed to be
an effective one-third or one-sixth rule.  Somehow, his
indignation at a prospective cut is far more ferocious
than that of the taxpayers who support the transfers.

There is a real paradox here.  Suppose we are living in
a time when the rate of increase in transfer payments
is decreasing, at least as far as some specific
programs go.  Such a taxeater might well have expected
that the rate of increase should continue.  Taking our
hypothetical bureaucrat again, he might have embarked
on a career as a civil rights lawyer with the Equal
Opportunity Commission at a time when this was the
case.  Now he finds that promotions are more difficult
to come by and has trouble making ends meet in paying
his mortgage on a house bought in anticipation of these
promotions.

It might be hard to find much sympathy for the guy, who
seems to struggling taxpayers to be doing altogether
too well by doing good as it is.  Still, he has his
expectations and may claim that his future promotions
are part of the social contract, that they are part of
his own personal entitlement.  The paradox is that
there is an arbitrary zero point:  entitlements of an
existing sort (zero growth) are very different from
increasing or accelerating ones (first and second
derivatives greater than 0.000).  Perhaps the
explanation is that pleasure and pain involve different
neural mechanisms. [See, for example, _Magda B. Arnold,
Emotion and Personality_, 2 vol. (New York: Columbia
University Press, 1960).]  A cut in an entitlement
provokes pain, while a decrease in pleasure does not. 
The cut, then, arouses much more ferocious indignation
than the latter.  The indignation of civil rights
bureaucrat himself is probably more show than real.

RISK AVERSION IN THE SOCIAL CONTRACT

In any case, the issue remains of just what the social
contract consists of.  But more generally, the issue
also involves just what risks are implied in any social
contract.  In a general sense, the social contract is
not a distribution per se of the goodies, including a
big house and many promotions for the civil rights
bureaucrat, but a whole mechanism for government.  The
contract empowers the state to do certain things and
grounds these powers in specified constitutional
procedures.  It is not outcomes that are specified, but
rather constitutional machinery.

Social contract theorists have not addressed this
entitlement mentality or the protection against risk. 
What has been discussed is mostly what laws will get
passed, and the general idea ever since
_Thecalculusofconsent_ (now one word) [James M.
Buchanan and Gordon Tullock, _The Calculus of Consent:
Logical Foundations of Constitutional Democracy_ (Ann
Arbor: University of Michigan Press, 1962).  Ann Arbor
Paperback, 1965.] was published in 1962 is to balance
the costs of getting agreements with the costs that
enacted legislation will impose on others.  But it is
implicitly assumed that there will be only one session
of the legislature: call it into session, observe the
constitution, plug in utility functions, and presto!
one set of laws will spring forth for all time.  This
is not really true, of course; technological
developments will occur, generating new externalities
and changing production functions, and new laws will
get enacted.  So the legislature does not really meet
once and for all.  Even so, at any given state of the
world, one set of laws will tend to emerge.  True
again, in our great ignorance, we will pass laws that
fail to achieve their objectives--the Great Society
programs are regularly accused by conservatives of
doing just this [See Charles Murray, _Losing Ground:
American Social Policy, 1950-1980_ (New York: Basic
Books, 1984).] --and it does take time to wake up and
admit failure.  And we have the problem that advocates
of failed programs are altogether too slow to admit the
errors of their ways.  In the long run presumably they
will, and a new equilibrium will emerge in the fullness
of time.

Coupled with the pain of revising one's world view--In
my own case, though, I am bored with mine and want a
new one--there is often prestige and financial
advantage at stake.  This leads, not surprisingly, to
the entitlement mentality, not only to the "emoluments
of office" [The expression is John C. Calhoun's but may
have been used by others before.  See his _Disquisition
on Government_, published a year after his death in
1850.] but to calls for redoubling the programs in
hopes that, this time, they might succeed.  The call
for redoubling entrenches further the truth model of
politics, at the expense of the contractual, or
exchange, model.

SUBSUMING THE TRUTH MODEL

Happily, the contractual model can subsume the truth
model, in the following sense.  We need only adopt a
historical perspective:  our ideas about government
have drastically changed in the past, and they are
going to change in the future.  No one, if he stops to
think about it, can be really sure that he has arrived
at final truths, for foundations are bottomless. [Mario
Bunge, _Foundations of Physics_ (New York: Springer-
Verlag, 1967), final page.]  We just struggle along
with our three-pound brains, and whenever we have
arrived at what we think are answers, new questions
keep popping up.  I am arguing for adopting the
scientific temperament here, but this temperament is
rare. [The *I*ntroversion-I*n*tuition-*T*hinking-
*J*udging (INTJ) personality is described in a single
word as that of a scientist, and is estimated to
constitute only two percent of the U.S. population, in
David Keirsey and Marilyn Bates in their widely-read
_Please Understand Me: Character and Temperament Types_
(Del Mar, CA: Prometheus Nemesis, 1984).]

Now all social contracts are compromises:  not everyone
is going to be satisfied with the simple majority rule,
the two-thirds rule, the five-sixths rule, or whatever. 
Add also diversity regarding risk aversion and
entitlements.  Add to this a similar dispersion
regarding one's willingness to change one's mind, a
certain humility, and an adoption of the scientific
spirit.  The contractarian mentality also requires a
certain tolerance for human nature, precisely that our
willingness to change our minds is not all that it
might be.  This is another reason why the Wicksell-
Buchanan rule ought to be phased in, which it will be
in any case, if only because it will take much more
than the already thirty-one years (many of them very
long) since the publication of _Thecalculusofconsent_
for its simple ideas to diffuse to the level of actual
constitutional amendment.  Things could go poof! like
they did in the Soviet Union, except that things did
not go poof! even there.  The political structure on
top went poof! but the economy is still run largely on
Communist/bureaucratic lines.  Free enterprise, and its
associated institutions of law and capital markets, are
barely emerging.  So is risk-taking and the
entrepreneurial mentality.

It was about 1984 that I had concluded that socialism
was dead, dead as the wave of the future. I had also
concluded that the next entrenched ideology would be
libertarianism and that constitutional political
economists (as they were yet to be called) should gear
up for the battle ahead.  Libertarian theory is
powerless to handle such practical problems as the
_duration_ of patents and copyrights.  It flies against
the fact that the maternalistic, friendly fascist state
is tremendously popular, even as we wail against the
expense and the inefficiency.  A five-sixths rule would
control it but it would not eliminate it.

TERM LIMITS

But what to do beyond this?  Certainly, a reduction of
the *scope* of government would be in order, yet even
here the prospects of entrenched ideology remain. 
Alas, no one knows how to limit the scope of government
with a piece of parchment.  As noted above, the
violation of the Constitution arguably had begun with
the whiskey tax, and Washington certainly did violate
the Constitutional requirement of advise and consent of
the Senate on treaties by signing "executive
agreements." [See Arthur E. Sutherland, Jr.,
"Restricting the Treaty Power," _Ha'va'd Law Review_ 65
(1952): 1305 ff.  Reprinted in Robert G. McCloskey,
_Essays in Constitutional Law_ (New York: Random House:
Vintage, 1957).]  Government *can* be reduced by
raising requirements to pass legislation, but it can
also be reduced by term limits.  Obsolete ideologies
may remain entrenched in the media and the universities
far beyond their demise, but term limits will reduce
their entrenchment in the halls of the legislature. 
Again, they could be phased in.  This would take care
of the current and next generation of taxeaters and
those who cling to the welfare-warfare state out of a
reluctance to admit their errors.  In the long run,
term limits serve as a warning that *you* won't be able
to entrench *your* ideology in the legislature.  To
perpetuate it, you will have to persuade others and
*keep* them persuaded.  (Another device is to require
all legislation to sunset and be repassed with a larger
majority than was required initially.)

Of course, the current generation of welfare-warfare
ideologues will not take kindly to a phase-in of term
limits, the five-sixths rule, a reaffirmation of the
1789 limitations on the scope of government, or any
other reduction in their power.  (The civil rights
bureaucrat who bought a big house in expectation of
swift promotions already is unhappy.)

Alas, there is no way of gaining unanimous consent for
*any* sort of change, let alone major constitutional
change.  Life is short.  To justify change, we can only
and heroically *presume* consent.  We have to presume
that, if three-quarters of the states agree to
amendment, the change is universally accepted.  Of
course it isn't, unless we construe consent broadly to
include embrace of and resignation to fate.

THE CONTINUUM OF CONSENT

When is it stretching things to presume consent? 
Liberals never accepted the Reagan "mandate," while
claiming one for Clinton, whose 23.8% of the eligible
electorate is lower than that of any president since
John Quincy Adams in 1824.  But consent is in fact not
a yes-no thing, as generally perceived by social
contract theorists, but a continuum ranging from barely
refraining from armed revolt to Heavenly embrace.  This
matter of the continuum of consent needs considerable
attention, as it is not clear whether a high level of
consent should lead to more or less trust in
government.  What can be said is that an excess of
government failure can polarize society, thus reducing
the level of consent and respect for the law as such. 
(Prohibition was perhaps the event that triggered off
the eventual widespread disrespect for law.  Recall the
slogan "Law Enforcement," meaning enforcement of
Prohibition laws against alcohol only, in those days.) 
The polarization gets wider as taxeaters spread their
propaganda and ideology.

Now resistance to change on the part of liberals has
reached truth-model, ideological fervor.  I call it the
Ratchet Racket, whereby any (marginal) decrease of
entitlements or any (marginal) increased concentration
of income, however slight, is treated with vast
(global) indignation.  Equality *must* move forever
forward, in parallel with those who want ever more
economic growth.  Presumably, however, there are
optimum levels of both, but it is hard to pin down
anyone on what the optima are. Gordon Tullock has
routinely had liberals go limp on him when he tried to
get their opinion on the optimal level of equality for
going on three decades. [See Gordon Tullock, _Economics
of Income Redistribution_. The Hague: Kluwer-Nijhoff
Publishing, 1983.]

Social contractors are not supposed to go limp!  This
bodes ill for constitutional change when unanimity is
required.  As a descriptive discipline, constitutional
political economy could well investigate when
constitutions are gradually eroded and when they get
amended with varying degrees of consent along the
resignation-enthusiasm continuum.  We could do case
studies of what happens to government debt and unfunded
obligations in cases of amendment (and in cases of
secession as well).  My own efforts here are merely to
raise the basic issue of just what various participants
hold the social contract to be and even if they really
hold one at all and do not instead espouse some truth-
model version of politics, perhaps in a self-serving
way.  After this basic issue comes the extent to which
they have a contractarian mentality and where along the
continuum of consent they lie.  Yet even if inclined to
a truth-model version, they may (again to varying
degrees) be skeptical that they, personally, have found
the truth for all times.  A modicum of self-doubt (and
this goes for libertarians too) should lead contractors
to beware of future ideological entrenchment, for
prevention of which I suggest term limits.  Ideologies
shall always be with us, but it would be better to use
persuasion to promote them than institutional
entrenchment.

First version, 1993 January 1
Revised 1993 January 9
Revised and footnotes added 1993 April 24
Revised 1993 June 17
Formatted into ASCII 2000 July 28