economies

Article
Checks and Balances: Enforcing
Constitutional Constraints
Randall G. Holcombe
Department of Economics, Florida State University, Tallahassee, FL 32306, USA; [email protected]




Received: 28 August 2018; Accepted: 19 October 2018; Published: 24 October 2018


Abstract: Constitutional political economy has focused heavily on designing constitutional rules
sufficient to constrain governmental power. More attention has been devoted to designing rules that
are effective constraints than on the institutions that would be required to enforce them. One problem
is that rules are interpreted and enforced by the political elite, who tend to interpret and enforce
them in ways that favor their interests over those of the masses. Democratic oversight is ineffective
because voters realize they have no influence over public policy, and are therefore rationally ignorant.
A system of checks and balances within government is necessary for enforcing constitutional
constraints because it divides power among elites with competing interests and enables one group
of elites to check the power of others. Checks and balances within governmental institutions are
necessary to constrain the government from abusing its power.

Keywords: constitutional constraints; checks and balances; political elite; democratic oversight

JEL Classification: H11

1. Introduction
Buchanan (1975, pp. 2–3, italics in original) discusses the distinguishing feature of constitutional
economics. “In ordinary or orthodox economics, no matter how simple or how complex, analysis
is concentrated on choices made within constraints that are, themselves, imposed exogenously to
the person or persons charged with making the choice. Constitutional economics directs analytical
attention to the choice among constraints”. North (1991, p. 97) says “Institutions are the humanly devised
constraints that structure political, economic, and social interaction”. Constitutional economics,
following Buchanan and North, studies the choice among institutions—the choice among humanly
devised constraints. The literature in constitutional economics has focused heavily on the design of
effective rules to prevent the abuse of government power, and to facilitate government production that
benefits the general population rather than concentrated special interests. It has focused less on the
design of institutions that are able to effectively enforce those rules. This paper explains why checks
and balances are essential as a constitutional enforcement mechanism.

2. Constitutional Rules
Much of the work in constitutional economics focuses on the process by which citizens choose
constitutional rules, with a heavy emphasis on consensus among those who are governed by them.
The literature draws a parallel between market exchange, in which all parties to transactions agree and
thereby signal that they benefit from their exchanges, and political exchange, in which people cooperate
to collectively produce goods and services that they would not be able to produce by themselves or
through bilateral exchange. Maintaining that parallel construction, the political decision rule that
signifies everyone agrees is unanimity. Just as all parties to market transactions voluntarily agree to
them, unanimous agreement is the signal that all parties to political exchange are in agreement.

Economies 2018, 6, 57; doi:10.3390/economies6040057 www.mdpi.com/journal/economies

Economies 2018, 6, 57 2 of 12

The constitutional framework pioneered by Buchanan and Tullock (1962) and Buchanan (1975)
explains that for governmental activity to benefit everybody, agreement is required on the rules under
which people interact, but not generally on every action government takes. For example, people might
all agree that they benefit from paying taxes to finance roads, and might agree to delegate the decision
of where to build those roads to some governmental authority. In some cases, citizens might be made
worse off by the building (and financing) of some specific roads, but they would all agree they are
better off with the government-financed roads than they would be without them. In keeping with the
analogy to market exchange, optimal rules are rules to which everybody would agree.
Most of the literature in constitutional economics has dealt with the process by which
constitutional rules are designed, and the types of rules that would result from those processes.
There are many interesting and unresolved issues in this literature, which this paper bypasses.
Assuming that a desirable set of constitutional rules has been put into place, how can those rules be
enforced? The question of enforcement starts with interpretation. In a complex world, words can be
interpreted in different ways. An easy way to see that is to note that slightly more than half of United
States Supreme Court cases have been decided unanimously, which means that in nearly half of those
cases, legal experts—the Justices themselves—were in disagreement about how the law applies to
specific cases.
Schweizer (2013) says that laws are written to be deliberately ambiguous, for several reasons.
One reason is that ambiguous laws can be selectively enforced. Those who exercise political power can
use ambiguous laws to go after adversaries but to give allies a pass. Another is that those who write
ambiguous laws become experts on their intent and interpretation, allowing them to sell their services
to those who might be subject to enforcement.
Ambiguities in interpretation point to a second issue: Selective enforcement. Selective enforcement
allows laws to be enforced for the benefit of the enforcers and to the detriment of others who are in an
adversarial position to the enforcers, or are not being as cooperative as the enforcers would prefer.1
Factors like these have not been addressed in the constitutional political economy literature, which has
for the most part assumed that rules are unambiguous and objectively applied.2
To the extent that enforcement issues have been considered, the primary mechanism that appears
in the public choice literature is democratic oversight of government actions. While voting models
tend to point toward public policy being determined by the preferences of the electorate—in particular,
models like the median voter model explained by Downs (1957)—the conclusion of much of the
public choice literature is that democratic oversight is likely to be ineffective for a number of reasons.
Rent-seeking (Tullock 1967; Krueger 1974), regulatory capture (Stigler 1971), and the undue influence of
special interests (Olson 1965) all weigh against the idea that democratic oversight is an effective check
on the abuse of government power. Meanwhile, checks and balances within government institutions
have been underappreciated in the literature as an enforcement mechanism. To see why democratic
oversight is likely to be ineffective, and why checks and balances within government are essential,
the first step is to undertake a critical examination of the process by which public policy is made and
carried out in democratic governments.

1 Allison (2013), CEO of BB&T bank during the 2008 financial crisis, recounts banking regulators pressuring him into
participating in the government’s bailout program, even though he said his bank was financially sound and did not need a
bailout. They told him that new regulations were being written, and while they did not know what those regulations would
be, if he did not join the program, his bank would be in danger of being out of compliance. Allison took that as a threat that
unless he cooperated, regulations would be written and enforced to target his bank.
2 There is a literature on corruption that considers these issues. Aidt (2016) notes that there are commonalities between this
literature and the public choice literature on rent-seeking that have been left relatively undeveloped.
Economies 2018, 6, 57 3 of 12

3. The Public Policy Process

Democratic governments are, by necessity, representative democracies. Governments that
rule over millions of people, or even thousands, cannot be governed by direct democracy because
transaction costs are too high to allow that many people to negotiate public policy. Even if referendums
on public policy were offered to voters, the choices given to voters would be determined by an elite
few who have been delegated to exercise government power. Sometimes the political elite get their
power through democratic elections and sometimes through political appointment. Applying the
Coase (1960) theorem, a small group of people face low transaction costs and can bargain to design
public policy. They are the political elite. Most people face high transaction costs and are unable to
participate in the policy-making process. They are the masses.
The US House of Representatives, for example, has 435 members, a small enough group that they
all know each other and are able to engage in logrolling to produce policies that they view as beneficial.
Most readers of this paper will find themselves in the high transaction cost group, and will be unable
to participate in the political bargaining process that produces legislation. Public policy is created by a
small group of people, and the resulting policies apply to everyone.
The public choice literature offers well-established explanations for how the political process can
be used to benefit some while imposing costs on others. Rent-seeking, following Tullock (1967) and
Krueger (1974), describes how some are able have resources transferred to them from others using the
political process. Stigler (1971) has explained how some are able to capture the regulatory process so
that regulations nominally designed to constrain their actions benefit those who are being regulated
at the expense of others. Olson (1965, 1982) has explained how concentrated and well-organized
interests are able to use the political process for their benefit, at the expense of larger groups that are
less well-organized. All of these theories explain how some people are able to use the political process
to benefit themselves at the expense of others.
While the public choice literature offers many explanations for how some can use the political
process for their own benefit, it has not followed up by explaining that there is a relatively small and
stable group of individuals who are able to command rents, capture regulatory agencies, and organize
influential interest groups. One reason is that the public choice literature tends to take an individualistic
approach to analyzing political processes, which limits its vision in identifying the specific group of
people who benefit from political processes. Buchanan and Tullock (1962, p. 12) “reject any theory or
conception of the collectivity which embodies the exploitation of a ruled by a ruling class. This includes
the Marxist vision, which incorporates the polity as one means through which the economically
dominant group imposes its will on the downtrodden”. When one analyzes the political process,
though, public policy is made by a few—a ruling class—and imposed on everyone. Some people
are consistently in the group that benefits, and most people are consistently in the group that bears
the costs.
Elite theory, developed mainly in sociology and political science, paints a different picture,
describing ruled and ruling classes along the lines that Buchanan and Tullock dismiss. Mills (1956, p. 3)
says “The powers of ordinary men are circumscribed by the everyday worlds in which they live . . .
But not all men are in this sense ordinary. As the means of information and power are centralized, some
men come to occupy positions in American society from which they can look down upon, so to speak,
and by their decisions mightily affect, the everyday world of ordinary men and women”. Those are
the power elite—the few who make the public policies to which everyone else is required to conform.
Elite theory explains who designs and controls public policy, but it does not explain how they are
able to exercise this control. Public choice theory explains how some are able to use the system for
their benefit at the expense of others, but it does not identify who those some are. Holcombe (2018)
explains that when these two strands of academic literature are combined, they show that those who
obtain the rents, capture regulatory agencies, and form powerful interest groups are a relatively stable
group—the elite.
Economies 2018, 6, 57 4 of 12

Elite control of the public policy process has not escaped observation by economists. Stiglitz (2012,
pp. 39–40) says “We have a political system that gives inordinate power to those at the top, and they have
used that power not only to limit the extent of redistribution but also to shape the rules of the game in
their favor”. Stiglitz (2012, p. 59) goes on to say, “It’s one thing to win a ‘fair’ game. It’s quite another to be
able to write the rules of the game—and to write them in ways that enhance one’s prospects of winning.
And it’s even worse when you can choose your own referees. It doesn’t have to be this way, but powerful
interests ensure that it is”. Along these same lines, Acemoglu and Robinson (2008) develop a model in
which democratic political institutions evolve to favor the elite.
Nor has elite control of the public policy process escaped observation by the general public.
After the financial crisis that began in 2008, the Occupy Wall Street movement protested the government
policies that bailed out the Wall Street financial firms that took losses on their mortgage-backed
securities but did nothing to help people who found themselves under water on their mortgages and
were unable to pay them because they had lost their jobs due to the recession. They were complaining
about policies that they said favored the 1 percent over the 99 percent. In academic jargon, the 1 percent
are the elite; the 99 percent are the masses.
To a certain extent, the actions of the 99 percent produced the very policies they were protesting.
The twenty-first century view of the role of democratic government is to carry out the will of its citizens
as revealed through a democratic political process.3 When a crisis appeared in 2008, the 99 percent
demanded that the government do something to mitigate the crisis. Looking at how the political
process actually works, government is run by the 1 percent—the elite. Thus, the 99 percent were
demanding that the 1 percent be given more power to take action in response to the financial crisis,
which the 1 percent did. Understanding how the process works, one should not be surprised that
when the 1 percent took action, the action they took furthered their own interests. The elite make
public policy, so one should expect that when they find themselves relatively unconstrained, public
policy works to the advantage of the elite.
This is, Brennan and Buchanan (1985) explain, the reason for rules. They explain that a
constitutional framework provides the foundation for individual interaction. Those constitutional
rules should be designed to create a framework that channels individual actions away from predatory
zero-sum and negative-sum action toward action that is positive-sum and mutually advantageous.
Brennan and Buchanan (1985, p. 5) reference Hobbes to say that we benefit from a set of rules
that govern people’s interactions with each other because “ . . . without them we would surely
fight. We would fight because the object of desire for one individual would be claimed by another.
Rules define the private spaces within which each of us can carry out our own activities”.
What Brennan and Buchanan do not say is that when some people write and interpret the rules,
one would expect them to write rules that favor themselves, and interpret any rules in ways that
favor themselves. Buchanan and Congleton (1998) conclude that rules that are relatively permanent
and that apply generally to everyone will receive widespread approval from the masses. What this
line of reasoning does not take into account is that the elite write, interpret, and enforce the rules.
Writing the rules is the first step in the process. Even in this first step, those who write the rules
must be constrained to write them in a way that benefits everyone, not just the elite who write them.
Then, the elite must be constrained to interpret the rules in an even-handed manner that does not favor
themselves over the masses. And then, rules must not be selectively enforced so that enforcement
favors those who have political power over those who do not. The analysis that follows takes the first

3 This contrasts with the vision of democracy held by the American Founders, who designed a government with
constitutionally limited enumerated powers, and designed constraints to try to prevent government from actions not
specifically permitted by the Constitution. In this view, democracy is a method of selecting who exercises the power
of government, but not a method for determining what those powers are. The more modern view, Holcombe (2002)
explains, envisions democratic governments as furthering the public interest, where the public interest is revealed through a
democratic political process.
Economies 2018, 6, 57 5 of 12

step as given, and examines how rules can be interpreted and enforced in a way that does not favor
the elites (who interpret and enforce the rules) over the masses.
One might ask whether this framework, which depicts the elite as controlling the political process
for their benefit, overstates their influence over public policy. There is an extensive literature written by
authors ranging from the political right to the political left who make just this observation. Nader (2014)
argues that objections to the coalition of economic and political elites are so widely recognized from
one end of the political spectrum to the other that they form an unstoppable coalition that will put an
end to the cronyism and corporatism that everyone observes.4 Stockman (2013, p. 52) says, “Trying
to improve capitalism, modern economic policy has thus fatally overloaded the state with missions
and mandates far beyond its capacity to fulfill. The result is crony capitalism—a freakish deformation
that fatally corrupts free markets and democracy”. Bartels (2008) refers to this situation as the new
gilded age. Gilens (2012) cites growing inequality in political power that is creating an increasingly
divided society.
The idea that the political process is run by the elite for their benefit is well-supported in the
academic literature. Even if that literature overstates the power of the elite to benefit themselves at
the expense of the masses, there is still good reason to design an institutional framework in which the
ability of some to use it to benefit themselves at the expense of others is limited. How can constitutional
constraints on government power be enforced, when those who enforce them have an incentive to use
their enforcement powers to benefit themselves?

4. Democracy
One mechanism for enabling the 99 percent to exercise oversight over the 1 percent is democracy.
Democratic elections allow citizens to select who exercises the power of government, and create a process
whereby citizens can peacefully replace those with political power if they are unsatisfied with their
performance. Downs (1957) develops a model in which competition for elected office results in the election
of candidates who run on the platform most preferred by the median voter. Holcombe (1989) explains that
this model has often been used to conclude that governments do what the median voter most prefers.
Beyond the median voter model, voting models in public choice generally conclude that the
collective choice of a group is determined by aggregating the votes of the individuals in the group.
The implication is that the policy outcomes implemented by government are those chosen by the
voters. Even in models showing perverse outcomes, such as McKelvey’s (1976) demonstration that
that, in general, there is no stable equilibrium in majority rule voting, the conclusion, Riker (1980)
explains, is that political processes are unstable. This potential instability has been widely recognized
since the beginnings of the subdiscipline of public choice, and Arrow (1963) begins his well-known
book with an example of a cyclical majority. Yet Tullock (1982) observes that political outcomes appear
to be much more stable than economic outcomes, so if economists can argue that equilibrium models
are descriptive of market outcomes, surely the concept of equilibrium outcomes applies more to
government than to markets.
One explanation for the apparent stability of political outcomes, given in the previous section,
is that voters do not choose those outcomes. Public policy is chosen by an elite few—the 1 percent—not
the electorate. The elite are a small group who are able to bargain with each other to produce public
policies that are most favorable to themselves because, following Coase (1960), transaction costs are
low within that elite group. When transaction costs are low, political exchange produces a stable
outcome for the same reason market exchange produces a stable outcome. Voters do not decide public
policy outcomes. The elite negotiate among themselves to produce outcomes most valuable to them.

4 Nader may be overly optimistic on the success of this coalition, because while there is widespread agreement that the elite
control the political process, there is not agreement on the remedy. Those on the left tend to favor more government control,
while those on the right see the problem as being caused by government and argue for less government interference in
economic affairs.
Economies 2018, 6, 57 6 of 12

Just as with externalities in markets, the masses are in a high transaction cost group and are unable to
bargain to prevent costs from being imposed on them.
Public choice theory offers many reasons to question whether voters really do exercise any
effective control over the politicians they elect. One reason, given by Downs himself, is that it would
be so rare for any election outcome (except with a very small number of voters) to be determined by a
single vote that individual voters have no incentive to become informed. They are rationally ignorant
because they realize their one vote will have no effect. Uninformed voters are not in a position to
exercise control over those who they elect. Elections have symbolic value to elected officials by making
it appear that what they do has been chosen by the electorate, Edelman (1964) observes, but all this
does is give those who hold political power even more discretion to act to further their own interests
rather than in the interests of those who elected them. Elected officials can claim that they are carrying
out the will of the people, as revealed through the democratic political process.
Even those who are very interested in following politics will be unable to effectively monitor
those who they elect. For one thing, being a politician is a full-time job, so anyone really interested in
monitoring elected representatives would have to devote full time to it. Because there are many elected
representatives, there would not be enough time to monitor all of them. Furthermore, the people
who participate in political decision-making specialize in it, and have an understanding beyond what
outsiders could hope to achieve. Just as citizens would not expect to have as much medical knowledge
as a doctor, or as much knowledge about the operation of an automobile as an auto mechanic, it is
unrealistic to expect citizens to have sufficient knowledge to monitor those who specialize in politics.
While there is a market and individual choice for those who are looking for medical services or
auto repair services, there is no similar market for politicians. Those who exercise political power
claim a monopoly over it, and while they can be challenged in elections, challengers are only making
claims about what they would do if elected, so their claims cannot be verified as with incumbents who
are actually practicing politics. Voters cannot observe their actual performance until after they have
been elected, and few people think that campaign promises are as credible as, for example, automobile
advertisements. Voters do not have reliable information, and even when such information is available,
they have an incentive to remain rationally ignorant.
Because the general public has little incentive to organize to further their political interests,
Olson (1965) explains that concentrated interests are able to effectively organize to provide political
benefits to themselves by imposing costs on the masses. Public policy tends to favor special
interests—the 1 percent—rather than working in the interest of the general public—the 99 percent.
A well-established body of public choice literature helps explain why democratic oversight is likely to
be an ineffective mechanism for enforcing constitutional constraints on government actions.
Public choice voting models nearly always assume that voters vote instrumentally; that is, they vote
as if their votes can affect an election’s outcome. But Downs’ (1957) rational ignorance hypothesis rests
on the conclusion that voters know their individual votes will not affect an election outcome, so they
have no incentive to become informed or to vote instrumentally. Citizens do vote in large numbers,
and Brennan and Lomasky (1993) conclude that because they know their individual votes will not affect
election outcomes, they tend to vote expressively rather than instrumentally. They vote for outcomes that
make them feel good rather than those that actually are in their individual interests, which Tullock (1971)
notes can result in outcomes antithetical to their interests. Caplan (2007) goes one step further to argue that
voters cast votes that are rationally irrational. They have no incentive to rethink any irrational public policy
beliefs they hold, because their individual opinions will have no effect on public policy.
Wittman (1989, 1995) challenges the assessment given above, arguing that there are many mechanisms
that direct public policy to follow the preferences of the voters. Political advertising and party
brand name identification help provide voters with information, and voters can join special interest
groups like the National Education Association and the National Rifle Association to have their
collective preferences represented. Wittman explicitly notes that there are counter-arguments to all his
Economies 2018, 6, 57 7 of 12

point. Indeed, he recognizes that he is presenting counter-arguments to generally-accepted models in

public choice.
The point in mentioning Wittman’s analysis is to note that while the arguments presented
above about the influence of concentrated interests, rationally ignorant voters, and expressive
voting are well-accepted in public choice, there are arguments going the other way. Despite any
counter-arguments, the public choice literature provides many reasons for thinking that democratic
oversight will not be an effective way to interpret and enforce constitutional rules. The essential point
is that constitutional rules are designed, interpreted, and enforced by an elite few—the 1 percent—and
the masses—the 99 percent—have essentially no say over them. One cannot expect the powerless
99 percent to police the activities of the elite. Public choice theory gives ample reasons why democratic
oversight will be an ineffective constraint.

5. Checks and Balances

One of the celebrated innovations embodied in the Constitution of the United States was a set
of checks and balances that enabled one branch of government to check and balance the power of
the others. James Madison, in Federalist No. 51 (1788), discusses the role of checks and balances,
and explicitly recognizes that the reason they are required is to counter the potential for elite control
of government to oppress the masses, saying “Ambition must be made to counter ambition . . . It
may be a reflection of human nature, that such devices should be necessary to control the abuses of
government”. Constitutional rules will not be constraining unless those who interpret and enforce
them are also constrained, and if an elite few interpret and enforce the rules, any checks on the power
of those elites must come from other elites. The masses do not have the power to constrain elites, either
through democratic oversight or by other means.
Persson et al. (1997) note that a system of checks and balances requires a separation of powers
within the structure of government. But separation of powers is not the same as checks and balances,
and by itself can lead to outcomes worse for the masses. Brennan and Hamlin (1994) show that if
powers are merely separated, that can give those with some powers the ability to act unilaterally to
the detriment of all others. Separation of powers can create a common pool problem, where some can
use their (separate) powers for their benefit, imposing costs on others—others in different branches of
government, and others in the broader citizenry.
Checks and balances mean that along with a separation of powers, one branch of government
cannot act unilaterally without the agreement of another. But even this is not sufficient. The different
branches of government should be designed so that they have conflicting interests, but must reach
an agreement to take collective action. If their interests are all the same, they will act together to
accomplish their common ends rather than checking and balancing each other. With conflicting
interests, the interests of one branch can then check the interests of another. Persson et al. (1997)
provide an example of an executive branch that can propose a total budget and a legislative
branch that determines the components of the budget. By constraining the total size of the budget,
the executive branch can check the legislative branch’s ability to enlarge its individual components,
and by controlling its components, the legislative branch can check the executive branch’s appetite
for expenditures.
La Porta et al. (2004) note that an independent judiciary and constitutional review work
as a judicial check on the abuse of power by other branches of government. Different elements
of government can act as “veto players” who can prevent other elements from unilateral action.
Keefer (2002) looks at the effects of veto players on the ability of a central bank to undertake
independent monetary policy, and Beck et al. (2002) provide data on veto players in government.
This literature on veto players points to a productive way to view checks and balances, but veto players
are not necessarily the product of constitutional design.
For example, when a parliament contains members of many parties, a coalition of parties will
be required to take action, making the coalition members veto players. But, if a single party gains a
Economies 2018, 6, 57 8 of 12

majority of seats, it eliminates other parties as veto players, even though the constitutional design
remains unchanged. Ideally, a system of checks and balances will be built into the constitutional
structure rather than be the result of political factionalization. Durable checks and balances are a part
of the institutional structure within which government operates.
The system of checks and balances works on the principle that the individual branches of
government guard their powers from being usurped by other branches. The key feature here is
that some elites check and balance the power of others. If the masses have a minimal ability to check
the power of government, the only way checks and balances can be effective is if institutions separate
elites into groups with competing interests that have veto power over the actions of each other.
The United States Constitution embodies this idea by establishing executive, legislative,
and judicial branches of government that can check and balance each other. As Madison said, ambition
must be made to counter ambition. Actions taken by one branch require the cooperation of the others,
and as originally conceived, the House of Representatives and Senate were designed as a part of this
system. House members were elected by citizens and Senators were chosen by their state governments,
with the idea that for legislation to pass, it had to be approved by the representatives of the people in the
House and the representatives of the state governments in the Senate, as described by Zywicki (1997).
This check was nullified in 1913 by the 17th Amendment to the Constitution, which required direct
election of Senators. While Tarabar and Hall (2015) note that it appeared to have little immediate effect,
the fact that its supporters pursued the difficult process of amending the Constitution indicates that
they expected this weakening of checks and balances to make a difference. By eliminating this element
of competing interests, the elite were able to remove one point of conflict that could act as a check on
their abuse of power.
The US Constitution took some inspiration from British government, where the power of the
crown was checked and balanced by the House of Lords and the House of Commons. Courts also had
a place in checking the powers of the crown and Parliament. A comparison of British and American
checks and balances shows that the functional division of power may play a minor role when compared
to designing a system in which one group of elites has the ability to check and balance the power of
others. Congleton (2012) describes the evolution of liberal political institutions in Europe over the last
several hundred years, The key point is that over time institutions evolved to create political systems in
which there was a division of power, and in which no branch of government could act independently
without the cooperation of others.
With regard to contemporary American politics, Mann and Ornstein (2012) argue that
constitutional checks and balances have eroded substantially since the nation’s founding, and especially
beginning in the twentieth century with increasing authority moving into the executive branch of
government.5 More generally, Acemoglu et al. (2013) argue that checks and balances have been eroded
because the economic elite are better organized and are better able to influence politicians absent those
checks and balances internal to the operation of government.

6. Other Checks and Balances

The checks and balances discussed above apply to a single government that is designed so that
its various branches can check and balance each other. Madison, in Federalist No. 51 (1788) says “In
the compound republic of America, the power surrendered by the people is first divided between
two distinct governments, and then the portion allotted to each subdivided among distinct and
separate departments. Hence a double security arises to the rights of the people”. An additional
check is a federal system of government in which the state governments check the power of the
federal government and the federal government checks the power of the states. This check was

5 Mann and Ornstein (2012) attribute much of the breakdown of checks and balances to the increase in partisan extremism,
especially with reference to the Republican party, but that is beside the point for present purposes.
Economies 2018, 6, 57 9 of 12

clearly embodied in the original Constitution of the United States by specifying that Senators would
be chosen by their state governments, so for any legislation to be approved by both Houses to
become law, it would have to meet with the approval of the representatives of the state governments,
as Ostrom (1971) explains. This check was eliminated by the passage of the 17th Amendment in 1913,
which specified that Senators be elected by a direct vote of the citizens.6
Intergovernmental competition can also provide a check on the powers of competing governments,
Tiebout (1956) explains, pushing governments to respond to the demands of their citizens, yielding
another benefit of a federal system. Decentralized political systems allow more local control, another
possible check on the power of government. Local elites still control local government, but there is less
distance, socially as well as geographically, between local elites and the general public. Local control,
intergovernmental competition, and the ability of one level of government to check another are
mechanisms that a federal system provides to check and balance the power of the elites who hold
political power.
A free press is another mechanism that checks the power of government, which was
recognized by the American Founders and embodied in the First Amendment to the Constitution.
Coyne and Leeson (2009) note the impact of a free press on institutions, both reinforcing institutions
that provide general benefits and undermining institutions that allow elites to abuse their power.
This is a check that rests outside of government, but that can be enabled or inhibited by government
control of the media.

7. Conclusions
The important role constitutional constraints on government play in protecting the rights and
well-being of citizens has been well-recognized for centuries. Hume [1777] (1987, Essay VI) says
“Political writers have established it as a maxim, that, in contriving any system of government,
and fixing the several checks and controuls of the constitution, every man ought to be supposed a
knave, and to have no other end, in all his actions, than private interest . . . Without this, they say,
we shall in vain boast of the advantages of any constitution, and shall find, in the end, that we have
no security for our liberties or possessions, except the good-will of our rulers; that is, we shall have
no security at all”. Constitutional political economy has focused heavily on designing rules that give
those who hold political power the incentive to act in the public interest, but given those rules, they
can only be effective if they are effectively enforced.
Checks and balances are a requirement for enforcement, because an elite few write, interpret,
and enforce the rules. The 99 percent cannot regulate a process that is run by the 1 percent. The role of
checks and balances is to have subsets of the 1 percent check and balance the power of others in that
elite group.
The twenty-first century ideology of Progressive Democracy has weakened the constitutional
constraints on government, because it justifies government policies that benefit some at the expense of
others, and because it legitimizes the actions of a democratic government by depicting those actions as
carrying out the will of the citizens, as revealed through a democratic political process. The ideology of
twenty-first century Progressive Democracy encourages the 99 percent to demand the government take
action to address a variety of issues, rarely recognizing that the 99 percent are transferring additional
power to the 1 percent who write, interpret, and enforce the rules. Then, the 99 percent are surprised
when the 1 percent uses their additional power for their own benefit, and in response the 99 percent
again demand that the government should do something, which transfers even more power to the
1 percent.

6 The Articles of Confederation, the original US constitution, designed a government with only one legislative body whose
members were chosen by the state governments, providing even more of a check on the power of the federal government.
Economies 2018, 6, 57 10 of 12

Democracy is an ineffective constraint on abuse of government power, because it is based on

the illusion that the 99 percent can exercise control over the 1 percent—the elite who actually design
and enforce public policy. Public choice theory explains that the 99 percent are rationally ignorant
(Downs 1957), that concentrated interests are able to use the political system for their benefit at the
expense of the masses (Olson 1965), that government regulation works for the benefit of those who are
regulated (Stigler 1971), and that the elite are able to design institutions to transfer power to themselves
and away from the masses (Acemoglu and Robinson 2008). One cannot expect the powerless to control
the powerful, even if the powerless well-outnumber the powerful.
The elite control government, so the most effective way to constrain government and enforce
constitutional rules is to design institutions that give some elites the power to check the power of
others. Checks and balances work to enforce constitutional rules through a separation of power, so that
no single elite group can act without the cooperation of others. Separation of powers is not enough.
Institutions must be designed so that elites have conflicting interests that give them the incentive to
protect their own power by checking abuse of power by other elites. Institutions must be designed so
that any abuse of power by one set of elites can be countered by the power of another set, and those
different sets of elites must have the incentive to counter, to protect their own power.
The arguments presented here rest on a foundation that depicts government as ruled by an elite
few, with the masses having essentially no power to design, interpret, and enforce the rules that
constrain government. A more democratic vision of government depicts government as controlled
through democratic processes that begin with elections in which the masses vote to elect the elite few
who are able to exercise the power of government. Thus, in evaluating these arguments, one should
consider which vision of government appears to be more descriptive of actual political institutions.
The constitutional political economy literature, tracing its origins back to Buchanan and Tullock (1962)
and Buchanan (1975), depicts a set of constitutional constraints designed by a process that requires
agreement among those who are subject to those constraints. Yeager (1985, 2001) argues that these
models of hypothetical collective agreement to some set of rules have the pernicious effect of making
government actions that are taken by an elite few and that are based on force appear as if they have been
somehow agreed to by citizens. Recognizing that all government action is backed by the threat of force for
noncompliance, and recognizing that an elite few are in a position where they can exercise government
power, there is good reason for constitutional political economy, as a subdiscipline, to focus more attention
on the types of institutions that can objectively interpret and enforce constitutional rules. It is not enough
to have good rules if those rules are not objectively interpreted and enforced. If the elite really do control
the state, there is good reason to think that democratic oversight will be ineffective and that checks and
balances are necessary to constrain those who hold the power of government from abusing that power.

Funding: This research received no external funding.

Conflicts of Interest: The author declares no conflict of interest.

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