In celebration of Constitution Day this week, Northwood University has posted a fresh lesson in the Philosophy of Free Enterprise, a free online course for anyone interested learning about the importance of freedom and free-market economics.
“It is fitting that this latest lesson — which explores America’s debt crisis — comes as we celebrated Constitution Day on Sept. 17, as the lecturer makes a great case for Constitutional amendments that could reign in Congressional spending,” stated Northwood Economics Chair Dr. Dale Matcheck.
The online course, Philosophy of Free Enterprise, includes a series of complimentary lessons for anyone interested in free-market economics and The Northwood Idea, which is Northwood University’s guiding philosophy. It values freedom, personal responsibility, moral law, earned success, and the importance of business.
Like the other course modules, this newest lesson appeals to viewers from all educational levels and backgrounds. Taught by Dr. Michael Makovi, an associate economic professor and Bretzlaff Scholar at Northwood University, the lesson – “Debt Crisis” — incorporates helpful animation and engaging dialogue delivered in a way that is easy to understand without a college degree.
Makovi explains the current state of America’s debt and what will happen if America were to default on our debt because we are unable to meet our financial obligations.
“No one is sure how exactly that would work, but some results are fairly certain,” Makovi notes in the video, explaining that interest rates on federal debt would increase and U.S. taxpayers would pay higher taxes to finance the same amount of federal government activity.
“The United States has never defaulted on its debt, but we have had close calls like the current situation many times before,” adds Makovi.
The debt ceiling was created to limit spending by Congress and the president. However, Congress routinely runs its budget against the ceiling and then votes to raise the limit to avoid default.
“Congress itself created the debt ceiling, and what Congress makes, Congress can change,” Makovi explains in the new lesson. “… For the debt ceiling to be a binding constraint, Congress must not be empowered to raise its own debt limit.”
Makovi outlines ways America can limit government borrowing, including amending the U.S. Constitution to restrict Congress from incurring more debt. A Constitutional amendment would require another amendment to increase the debt limit, which would make it far more difficult to amend the debt ceiling because amendments must be ratified by three-quarters of the 50 states, whereas legislation only requires a majority of Congress plus the president’s signature.
“Congressional representatives would be more likely to treat a constitutional debt ceiling as a binding constraint because the federal government could not unilaterally modify the ceiling,” Makovi states.
Alternatively, the U.S. could adopt a balanced budget amendment, which is the equivalent of a complete ban of debt. Some states, however, have enacted a hybrid balanced budget amendment which allows for debt for temporary and casual deficits for exceptional circumstances (like capital expenditures, such as transportation and other infrastructure.)
A third alternative is a debt break, which is implemented in Germany and Switzerland. A debt break requires that over the term of several years, the budget is balanced, but it allows deficits in particular years so long as they are balanced by surpluses in following years.
“The point, in any case, is that one way or another, some biding constraint on the debt should be embodied within the U.S. Constitution so that the government cannot unilaterally alter its debt limit,” Makovi states in the new lesson.
This new lesson follows several previously shared videos, and Northwood plans to release additional lessons throughout the upcoming academic year. Learners enrolled in the free online course can test their knowledge through quizzes and access thought-provoking supplemental reading material following each lesson. Upon completing the course, learners will earn certificates from Northwood University.
If you are not interested in completing the course but want to view the lectures, the following are available to watch on Northwood University’s YouTube channel:
A Time Traveler’s Brief History of Progress
Prices, Knowledge, & Incentives
The videos and Philosophy of Free Enterprise online course are possible thanks to the principal donors behind this effort, Donald S. Gottwald, a 1988 alumnus, and his wife, Pamela. The effort also was aided by a generous gift from the Thomas F. and Harriet S. Oakley Family Trust.
Donors who value liberty, the American free-enterprise system, and the creation of leaders who drive economic and social progress may consider a gift to Northwood University. Visit our giving page or contact Northwood’s advancement office at (989) 837-4356.
