Constitution and Economic Development – US Government

This chapter covers US government, US constitution and it’s economic development.


During the debate over the ratification of the US Constitution they argued that the Constitution would erode fundamental liberties and weaken the states.

Articles of Confederation

1st Constitution of the U.S. 1781-1788 (weaknesses-no executive, no judicial, no power to tax, no power to regulate trade)

authoritarian regimes

A government that concentrates political power in an authority not responsible to the people

Bill of Rights

Although the Anti-Federalists failed to block the ratification of the Constitution, they did ensure that the Bill of Rights would be created to protect individuals from government interference and possible tyranny. The Bill of Rights, drafted by a group led by James Madison, consisted of the first ten amendments to the Constitution, which guaranteed the civil rights of American citizens.

consent of the governed

Agreement by citizens to obey the laws and the government they create. Consent is the foundation of government’s legitimacy.


A political system in which the supreme power lies in a body of citizens who can elect people to represent them

direct democracy

A form of government in which citizens rule directly and not through representatives

An Economic Interpretation of the Constitution

A Book written in 1913 by Charles Beard. He believed that the founders created the constitution to benefit their economic interest.

elite theory

A theory of government and politics contending that societies are divided along class lines and that an upper-class elite will rule, regardless of the formal niceties of governmental organization.

electoral college

A group of people named by each state legislature to select the president and vice president

Federalist Papers

A series of 85 essays written by Hamilton, Madison, and Jay (using the name “publius”) published in NY newspapers and used to convince readers to adopt the new constitution

Federalist #10

An essay composed by James Madison which argues that liberty is safest in a large republic because many interests (factions) exist. Such diversity makes tyranny by the majority more difficult since ruling coalitions will always be unstable.


A term used to describe supporters of the Constitution during ratification debates in state legislatures.

formal amendment process

Article V; the (very difficult) process of adding or deleting words to the constitution (27 times since 1788); propose by 2/3 vote of Congress or Constitutional Convention (never used); ratify by 3/4 vote of state legislators or state convention (only used once)

The Great Compromise

2 houses, House of Representatives would be based on population, the senate would have 2 representatives from each state

informal amendment process

Changing the meaning of the Constitution without a formal amendment (ex. Supreme Court opinions, laws, custom)

judicial review

Review by a court of law of actions of a government official or entity or of some other legally appointed person or body or the review by an appellate court of the decision of a trial court

Marbury v. Madison

This case establishes the Supreme Court’s power of Judicial Review

John Locke

17th century English philosopher who opposed the Divine Right of Kings and who asserted that people have a natural right to life, liberty, and property; consent of the governed


A political theory holding that in a democracy, the government ought to do what the majority of the people want.

natural rights

Jefferson used Natural Rights in the declaration of Independence and he gave his appeal universality by invoking “natural rights” not just British rights…Life, Liberty, Property or pursuit of happiness

New Jersey Plan

A framework for the Constitution proposed by a group of small states; its key points were a one-house legislature with one vote for each state, the establishment of the acts of Congress as the “supreme law” of the land, and a supreme judiciary with limited power.


A theory of government that holds that open, multiple, and competing groups can check the asserted power by any one group.


Formal approval, final consent to the effectiveness of a constitution, constitutional amendment, or treaty

representative democracy

A system of government in which citizens elect representatives, or leaders, to make decisions about the laws for all the people.


A form of government in which citizens choose their leaders by voting

Second Treatise of Government

Written by Locke, Government created to protect life, liberty, and property.

Shay’s Rebellion

Rebellion led by Daniel Shays of farmers in western Massachusetts in 1786-1787, protesting mortgage foreclosures. It highlighted the need for a strong national government just as the call for the Constitutional Convention went out.

social contract

A voluntary agreement among individuals to secure their rights and welfare by creating a government and abiding by its rules.

state of nature

The basis of natural rights philosophy; a state of nature is the condition of people living in a situation without man-made government, rules, or laws.

Three-fifths Compromise

Agreement that each slave counted as three-fifths of a person in determining representation in the House for representation and taxation purposes (negated by the 13th amendment)

Virginia Plan

“Large state” proposal for the new constitution, calling for proportional representation in both houses of a bicameral Congress. The plan favored larger states and thus prompted smaller states to come back with their own plan for apportioning representation.

block grants

Federal grants given more or less automatically to states or communities to support broad programs in areas such as community development and social services; example of devolution

categorical grants

Federal grants for specific purposes, such as building an airport

commerce clause

The clause in the Constitution (Article I, Section 8, Clause 1) that gives Congress the power to regulate all business activities that cross state lines or affect more than one state or other nations.

concurrent powers

Powers held jointly by the national and state governments.

confederate system

A system consisting of a league of independent states, each having essentially sovereign powers. The central government created by such a league has only limited powers over the states.

cooperative federalism

Cooperation among federal, state, & local governments; “marble cake” federalism

creeping categorization

Block grants become more restricted by rules due to conditions added later by Congress; the tendency for grants to acquire mandates where none had existed previously

delegated powers

Powers specifically given to the federal government by the US Constitution, for example, the authority to print money.

devolution revolution

The effort to slow the growth of the federal government by returning many functions to the states.

dual federalism

A system of government in which both the states and the national government remain supreme within their own spheres, each responsible for some policies. Also called “layer cake federalism.”

elastic clause

Article I, Section 8, of the Constitution, which allows Congress to make all laws that are “necessary and proper” to carry out the powers of the Constitution.

eminent domain

Allows the govt to take property for public use but also requires the govt to provide just compensation for that property


A legal process whereby an alleged criminal offender is surrendered by the officials of one state to officials of the state in which the crime is alleged to have been committed.

federal systems

government systems that divide the powers between the national government and state or provincial governments


A system in which power is divided between the national and state governments

fiscal federalism

The pattern of spending, taxing, and providing grants in the federal system; it is the cornerstone of the national government’s relations with state and local governments.

full faith and credit clause

Constitution’s requirement that each state accept the public acts, records, and judicial proceedings of every other state

Gibbons v. Ogden

This case involved New York trying to grant a monopoly on waterborne trade between New York and New Jersey. Judge Marshal, of the Supreme Court, sternly reminded the state of New York that the Constitution gives Congress alone the control of interstate commerce. Marshal’s decision, in 1824, was a major blow on states’ rights.

grants-in-aid system

a giving of federal funds to a state or local government to subsidize a public project

Kelo v. New London

eminent domain case; local govt may force the sale of private property and make way for private economic development when officials decide it would benefit the public

loose construction

Belief that the government can do anything that the Constitution does not prohibit but does imply


An official order or commission to do something; may be funded or unfunded

McCulloch v. Maryland

– An important decision of the Supreme Court in 1819 that established the key concepts of implied powers, broad construction of the Constitution, and supremacy of the national government

national supremacy

Constitutional doctrine that whenever conflict occurs between the constitutionally authorized actions of the national government and those of a state or local government, the actions of the federal government prevail.

necessary and proper clause

Clause of the Constitution (Article I, Section 8, Clause 3) setting forth the implied powers of Congress. It states that Congress, in addition to its express powers, has the right to make all laws necessary and proper to carry out all powers the Constitution vests in the national government


The doctrine that a state can declare null and void a federal law that, in the state’s opinion, violates the Constitution.

regulated federalism

A form of federalism in which Congress imposes legislation on states and localities, requiring them to meet national standards

reserved powers

Powers not specifically granted to the federal government or denied to the states belong to the states and the people; powers reserved for the states

revenue sharing

A law providing for the distribution of a fixed amount or share of federal tax revenues to the states for spending on almost any government purpose.

state compact/contract

an agreement among two or more states . congress must approve most such agreements

strict construction

A judicial philosophy that looks to the “letter of the law” when interpreting the Constitution or a particular statute; exactly as it is written

supremacy clause

Article VI of the Constitution, which makes the Constitution, national laws, and treaties supreme over state laws when the national government is acting within its constitutional limits.

Tenth Amendment

Amendment stating that the powers not delegated to the federal gov. are reserved to the states

unfunded mandates

Actions imposed by the federal or state government on lower levels of government which are not accompanied by the money needed to fund the action required.

unitary governments

A way of organizing a nation so that all power resides in the central government. Most national governments today are unitary governments.

United States v. Lopez

1995 – The Commerce Clause of the Constitution does not give Congress the power to prohibit mere possession of a gun near a school, because gun possession by itself is not an economic activity that affects interstate commerce even indirectly.