Hillary Clinton calls for fairness in our financial system. Bernie Sanders made the case for a rigged system. And Donald Trump also states that the system is rigged, specifically against him. It is clear that Sanders and Clinton are addressing issues like income inequality and the disproportionate influence of a financial sector that now accounts for 18% of the American economy. Trump at times recognizes these issues, but also includes the political parties, the media, and basically any group opposed to him in his determination of a rigged system. Alexander Hamilton, the man often said to be the father of our American system, was forthright on this subject: “The prosperity of commerce is now perceived and acknowledged by all enlightened statesmen to be the most useful as well as the most productive source of national wealth, and has accordingly become a primary object of their political cares.” Clearly, Hamilton married capitalism to the American system of democracy. And so it has been throughout our history. So why, one might ask, does this marriage raise so much dispute and claims of a rigged system?

In this presidential election year, we once again witness the push/pull between capitalism and democracy, the dual agents that have indeed made America great. Capitalism has created a middle class and unparalleled national wealth. Democracy has provided the individual freedom and rights that are the crowning achievements of Western European civilization and a beacon of hope for the world. But unbridled capitalism can threaten democracy at its core, just as one person’s greed can deprive another of his/her rights or opportunities in a free society. Theodore Roosevelt addressed this threat to democracy with his campaign against the “barons of industry.” His cousin, Franklin Roosevelt, came to this threat from the flipside of the problem: he initiated programs to help the victims of economic profligacy. After the Roosevelts and World War II, our country witnessed the greatest growth of the middle class in our history. It was this period of growth that probably inspired Reagan to state “a rising tide lifts all ships.” After a period of “stagflation,” he initiated policies that reduced taxes and continued Carter’s efforts to phase out Nixon’s wage and price controls—policies that along with the oil glut of the 80’s were the most likely factors in increasing productivity. But they also led to nearly doubling the Federal deficit. More to my point, he demonstrated how the government’s manipulation of the tax code can affect that delicate balance between economic prosperity and the general welfare of the state. To once again quote Hamilton, “The ability of a country to pay taxes must always be proportioned (italics are mine), in great degree, to the quantity of money in circulation, and to the celerity with which it circulates.” How well-proportioned is our current tax structure and how does that relate to the rigged system referenced by our presidential candidates?

Some years ago a friend explained to me how he could borrow money and make millions in the real estate market. He simply boosted his net worth by stating the market value of existing holdings while not declaring all of his debts. He basically defrauded banks and bragged about becoming a millionaire by using other people’s money. Notably, Trump also has bragged about his ability to become rich by using his self-coined acronym ‘o’ ‘p’ ‘g’ or other people’s money. In his case, he may not have defrauded anybody, but merely used the existing tax structure to benefit his personal finances. The problem here is that our current tax structure disproportionately favors the rich. Let me make a simple comparison. Many Americans are invested in the stock market through 401Ks and IRAs. As they convert these investments into liquid funds for education, retirement, or personal emergencies, they pay taxes. If the withdrawn securities experience gains, they pay taxes. If they instead have losses, those loses are deducted from net income, but only to a specified limit. And any loss carryover to subsequent years is also limited. But the limited partnerships and specified corporate investments made by Mr. Trump are blessed by a tax code that allows all operating costs, like construction costs and investment losses, to be carried forward in individual tax returns against future net income. So he could accumulate losses after several years of failed businesses and turn his entire $900+ million dollar loss into 50 million dollar deductions for each of the following 18 years. I think Alexander Hamilton would declare this deduction extremely disproportionate. Nearly a billion dollars are concentrated in one pocket. In Trump’s case, “other people’s money” means the taxes other people pay and cannot circulate broadly into the economy.

For years, we have heard politicians rail about our tax system and promise reforms. Often campaign pandering defines these “reforms” as tax cuts or, in extreme cases, the elimination of the IRS. But the “reforms” we have actually witnessed more often have had a negative impact on the middle class, such as limiting the mortgage deduction, the capital loss deduction, the health care deduction, and so on. Although there have been some positive changes like an increase in the dependent deduction, a reduction in the number of tax rates, and the exemption of the very poor, the average middle class family with a home and pending tuition costs has experienced a net increase in expenditures. And the disproportions in our tax system only serve to augment this financial bind. Whether it is pharmaceutical costs, college tuitions, health care inflation, inefficiencies in our transportation infrastructure, or the removal of pollutants from air, water and soil, America’s vast resources seem not enough to serve these basic needs. Here is the corollary I dare to make of this condition: the country is running a deficit and does not have enough money to provide for our general welfare. In other words, America is not living up to the standard set in the Preamble of our Constitution. As a result, in spite of our nation’s wealth, more families seem to be struggling to make “ends meet” than at any time since the last world war. The average debt in Middle America is many times greater than 50 years ago; and tuition debt for college is totally off the charts over the same time period. My case in point: I remember paying $600 per semester for graduate classes at the University of Southern California, one of the premier institutions on the West Coast. My part time job as a box boy at the neighborhood market earned me enough money to pay my tuition and rent an apartment close to the University. Does that capability exist today? And should there be any mystery about the shrinking of the middle class or the rise in wealth of the one percent?

At the heart of this problem of a rigged system is something no one seems to address. That problem is one of morality, or the standards by which we measure and conduct our actions. In classical literature, mos, moris, the Latin derivative for our word “morality,” was used to signify “custom” or “behavior.” But its root meaning is “the will of a person.” The morality that defines our values and determines our customs, our culture, and even our civilization is a function of how we exercise our free will. And that exercise is based on the goals or “ends” we freely choose. So everybody has a moral compass, though we as individuals may not agree on each other’s chosen direction. And here is the root of our problem. One type of businessman may believe Reagan’s “rising tide” is a carte blanche to pursue profits and wealth above all else. Ann Rand seemed to believe that personal success was proved by the accumulation of wealth through the exercise of superior business acumen. Our current Speaker of the House found her books inspiring. Mr. Trump, though he probably never read her books, would probably agree in principle. His path to “success” was to accumulate wealth by out dealing competitors. His morality justifies stiffing employees and small businesses, while utilizing tax loopholes, intimidating lawsuits, and bankruptcy laws to his advantage. To some degree, many large businesses have used some of these tactics to maintain quarterly profits and attract investors. But there is a reason why no top 500 corporate CEO has endorsed Mr. Trump. Most of the business world recognizes that his conduct in business is offensive to the “mores” of Americans. His bragging about his accomplishments is embarrassing, even to those who may have engaged in some of the same practices. Corporate image is important. But image is not reality. Profits sought for their own sake and at all costs are not always beneficial to society as a whole. Greed tramples on the rights and opportunities of others. When large companies pay lobbyists to win tax law concessions, they serve their interest at the expense of the general population. When legal matters are settled in the courts by high priced lawyers, money may become the main determinant of the outcome, not justice. When “capitalism” is defined as the primary moral code of our country, we debase the preamble of our Constitution and threaten its roots in democracy.

Senator Kaine illustrated the theme of this blog in the recent Vice Presidential Debates. As a Jesuit trained Catholic, he is known to be personally opposed to abortion. Yet his position on the right to have an abortion is based upon personal choice, to wit, “no one should deny a woman the right to make her personal decision regarding the reproductive rights of her own body” (a paraphrase). His justification for this position, he explained, was the Constitution and his support for the Supreme Court’s ruling in “Roe vs. Wade.” In his opinion, the Constitution takes precedence over the practices of any specific religion or religious practice. What the First Amendment states is that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . .” Therefore, in order to assure freedom of religion it is necessary to allow the free exercise of all religions without providing legal preference for any one religion. No elected official in America should give precedence to any religion or “-ism” over the values and dictates of our Constitution. In other words the same case can be made for capitalism. The Constitution defines the authority of Congress to raise revenue (the tax code), to collect taxes (via the IRS), and to pay debts (the national budget). What you will NOT find in the Constitution is any reference to capitalism per se. Read the Preamble and you will find how our founding fathers sought to “form a more perfect Union.” The words “justice,” “domestic Tranquility,” “common defense,” “general welfare,” and the “blessings of Liberty to ourselves and our Posterity” are the established goals of our Constitution. They are our moral code. Capitalism, however, is not a goal, but a means to reach our goals. Were it otherwise, Americans would gradually succumb to economic oppression. Remember what spurned the American Revolution, “no taxation without representation.”

Clearly our elected officials should make our national wealth “a primary object of their political cares,” as Hamilton suggested. But, as a signatory and one of the initiators of our Constitution, he never intended to replace monarchy with a financial oligarchy. After the Great Recession, does anybody have any doubts about the need to reform our tax code, our budget priorities, and the excesses of our financial sector? The bailout has cost tax payers trillions of dollars, most of which was added to our national debt. That debt will be a burden for future tax payers, but not proportionately for the super wealthy or many large corporations, especially those who export their wealth overseas. It pains me to admit our economic system is indeed rigged. The presidential candidates are right, though Mr. Trump’s assertion of a rigged system is ingenuous. Is he not one of its luminaries and outspoken beneficiaries?

(Blog Advance Notice: My next article will be “How to Make America Great Again.”)