The Bailout and the Myth of Limited Government

0:00Well, Randy and Marshall made all the points that I had written down here to say, so I'm going to be kind of short. One sign of hope is that there are these t-shirts around you. You probably see, if you go up into town, you see these t-shirts with big, mouthy, tongue-style pictures of Obama on them. It's a lot of college kids. But I saw another one, and it says, Hope, on the t-shirt. But I saw another one that a young guy was wearing, and it said, Hope, and there's a picture of Bob Hope on there. So ridicule can be very very effective in these things. I'm sort of a late addition to the panel and so they gave me that my topic is I think as Jeff Tucker assigned me the topic of the name of the panel of the bailout in the myth of limited government and one thing I'll mention about since I have the time about Marshall's talk it reminded me of there's a famous Supreme Court decision in

0:571866, Ex parte Milligan, where the Supreme Court made two points, and it addressed the illegal suspension of habeas corpus by Lincoln, and the point number one was the Constitution applies to everyone, even the President, and point number two was it is most important to enforce the Constitution in times of emergency, because that's when we lose our rights. We don't lose our rights normally when there's no emergency, and so things have changed. When the future Supreme Courts invent these myths that the Constitution itself somehow provides emergency powers, that's all a part of what's called constitutional law, which is very different from the Constitution itself.

1:43Another point I want to make about the discussion that just went on is with regard to what's likely to happen with regard to the central planning of the economy in the total ignoring of Constitutional Authority, which of course has been going on for a long time, is Bernanke made a speech a few days ago advocating, it was a sales pitch for something called, a new government agency called the Systemic Risk Authority, where a new government agency funded by Congress and controlled by Congress will supposedly regulate all risk taking by financial institutions. And so you can imagine this will be controlled by politics, of course, and so every corporation in America will be lobbying Congress to prohibit the risk-taking of its competitors and to allow its own risk-taking.

2:33It will be one gigantic rent-seeking carnival, and it will be totally destructive, and add on top of that the de facto nationalization of banks. and we got what a radio talk show host in Charleston that I was on his show a couple weeks ago called Obamianism that's what he's got so he's calling this whole system and I couldn't resist making these comments about these two speakers but what I prepared to say shortly is since since I've been writing these books about the history and economic history is one thing that's The thing that's going to happen as a result of all of this, I hope, is that conservatives will give up this crazy idea that the Constitution can somehow be used as a break on government power.

3:21It should be apparent to everybody by now that the Constitution has been long dead as a check on governmental power, and certainly the nail was in the coffin, the final nail was pounded in the coffin a long time ago, but a lot of people don't seem to understand that. And historically, I think what Americans need to understand also is that at the time of the founding, when this idea of limited constitutional government came about with the Constitution, the two big adversaries, Hamilton and Jefferson, had diametrically opposed views of what this Constitution should do. Hamilton, or Jefferson, famously said the government should be bound by the chains of the Constitution, a check on governmental power. Hamilton, the opposite. Hamilton, like Jefferson, was a lawyer, and he thought that properly interpreted the Constitution could be a rubber stamp on unlimited governmental power, if properly interpreted. After all, he was the one who invented the idea of implied powers of the Constitution, war powers, he invented this. And so, and he was a very clever lawyer,

4:28And he literally wrote the book on how to subvert the Constitution to create bigger government. And in my book on Hamilton, I have a chapter called Hamilton's Disciple, How John Marshall Subverted the Constitution. And Marshall worshiped Hamilton's intellect and quoted him verbatim in some of his most important decisions with regard to the constitutionality of the central bank, for example. And so this has been going on a long time. This battle over how to interpret the Constitution, I don't think very many people in America understand that Hamilton's view was that this Constitution could be used as a rubber stamp for unlimited government. That's why Jefferson hated him so much. He didn't just disagree with him. These men really disliked each other. When Jefferson gave his first and all girl The Federal Address I mentioned yesterday, Hamilton condemned it as the symptom of a pygmy mind.

5:26And then Hamilton created the New York Post newspaper as a way of smearing Thomas Jefferson. So this was a pretty nasty political battle. So this political battle commenced at the time of the American founding and it went on and on for a long time. By the time you get to 1850, I want to read something from John C. Calhoun, his famous Disquisition on Government. Calhoun was a former vice president of the United States, a U.S. senator from South Carolina, among other things, and a lot of you are familiar with Calhoun's work. Murray Rothbard thought Calhoun was one of the preeminent political philosophers in American history, up to Murray's time, and Calhoun is famous for understanding what we know as the libertarian class analysis. It's not a class struggle analysis in the Marxian sense, but the classes are the net taxpayers and the net tax consumers. The net tax consumers essentially plunder And here's one of the things that Calhoun said about this system of this political battle

6:49in a democracy between net taxpayers, net tax consumers, where there are no means by which they, the constitutionalists that is, could compel the major party that controls the government to observe the restrictions on government that the constitution has. The only resort left to them would be a strict construction of the Constitution. To this, the major party would oppose a liberal construction. It would be construction against construction, the one to contract and the other to enlarge the powers of the government to the utmost. But of what possible avail could the strict construction of the minor party be against the liberal construction of the major? The major party is the Hamiltonians, who want to rewrite the Constitution, the minor party by the Jeffersonians.

7:40When one would have all the power of the government to carry its construction into the effect and the other be deprived of all means of enforcing its construction, the Jeffersonians, in a contest so unequal, the result would not be doubtful. The party in favor of the restrictions would be overpowered. The end of the contest would be the subversion of the Constitution. The restrictions would be ultimately annulled and the government would be converted into to One of Unlimited Powers, end quote. That was in 1850 that Calhoun wrote that. And of course that, and he was, he was addressing himself directly to this, the Hamilton-Jefferson debate over the Constitution here. He understood what was going on. That's why Calhoun thought we needed more than just this written Constitution if the citizens were to really control their government. We needed more than that. We needed his famous concurrent majority. And I would and also the rights of nullification and secession and the threat of secession and so but by the time you get to the end of the civil war in one of my books I quote Woodrow Wilson president Woodrow Wilson who was a political science professor at Princeton before of course before becoming president in one of his books on the US government he praised the fact that was a good thing that by the by the end of the Civil War by 1866 we have finally established the president where the Supreme

9:05The U.S. Supreme Court was the ultimate decider of constitutionality. So it wasn't George W. Bush who became the decider. It was the U.S. Supreme Court in the 1860s. And the Jeffersonians, again, thought that this was a catastrophe. Because what this meant, finally, by the time we get to 1866, that the federal government, at that point, became the sole decision-maker with regard to what the limits on government power should be. and the Jeffersonians had always argued of course that well if that day ever comes the government will decide there are no limits to to powers and that's that's what's happened and so once that was established you know what did we have in the late 19th century one of the things we had was the beginnings of corporate welfare run amok beginning with the the the subsidies to the transcontinental railroads in one of the books I cite in my writings it's by a man named Leonard Curry, and the book is called Blueprint for Modern America, and he writes of how once

10:06these constitutional limits on corporate welfare were wiped away during the Civil War, the floodgates were open. Every corporation in America went to Washington looking for some sort of transfer, subsidy, protectionism, handout, and it was Grant, it was President Grant who invented the word lobbyist during his time to refer to all these lobbyists who were hanging out in the lobby and the lobbies of the Willard Hotel waiting their turn to bribe Congress for some goody for their company. And so what we had was really the American economy was transformed at that time, beginning in the 19th century, the late 19th century, into a system of sort of economic fascism and not capitalism, not real capitalism, but economic fascism as we later would know it in Europe.

10:56You know, ostensible private property, but government that was controlled in many ways by private property and businesses that were controlled in many ways by government because with government money always comes government control. There was just an article yesterday about all the restrictions the government is making on these banks that have taken bailout money now. All sorts of affirmative action restrictions and who you can hire, what you can pay people, so that's been going on forever. going on forever. This is certainly nothing new. And so this built and built, this system of what I would call economic fascism. Read Bob Higgs' book, War, Depression and Cold War to see what happened during World War I and World War II with regard to the ratcheting up of governmental restrictions that are accompanying all these governmental subsidies. And really to show how the Constitution really was dead a long time ago, I cite Andrew Napolitano The Constitution in Exile, and I also cite the book by Bernard Sagan, Economic Liberties in the Constitution.

12:01I didn't really realize this, but they both said, and maybe you legal beagles out there like Marshall can correct me on this, but both of these men who I have a lot of respect for as writers and researchers said that between 1937 and 1995, the Supreme Court did not strike down any federal laws as unconstitutional. and maybe Marshall can correct me on that, but Napolitano and Sagan both say that, and so if the Supreme Court is supposed to be a check on governmental power, that's not much of a check, but I see the ending of true federalism or states' rights during the Civil War era as being the real cause of that, and so in light of this bailout, I guess what I'm saying is of course nothing new, but the origins, the origins of it, I want to really go back 220-some years to the original battle between Hamilton and Jefferson over what this Constitution is to do, and it took a long time to get here, but now we're

13:03finally adopting this horrible system that Randy described very nicely here. I don't know if nicely is the word to describe it, I think Obamianism is pretty good. I think the guy's name is Rocky D. in Charleston, South Carolina, I don't know what his real and the Federal Name is, but that's what he goes by on his radio show. And as far as optimism, I'll repeat what Lew Rockwell said yesterday. If you think of what the 1930s when we had an economic catastrophe created by the Fed once again, we only had about a half a dozen classical liberals who were effective in opposing these things. and Lew rattled off, you know, Benjamin Anderson, John T. Flynn, H.L. Mencken, but even they got the Rush Limbaugh treatment.

13:50You know, they had the government crack down on them, the government tried to do all sorts of nasty things to them, the FDR tried to put Andrew Carnegie in prison and things like that. But the optimism is we've got hundreds, thousands and thousands of scholars and writers now The Internet and all these books that Jeff Tucker sells downstairs that people actually read. I assume you do, you spend all your money on them. I see people with big shopping bags walking around here. And so we've got a huge infrastructure of ideas to oppose all of this with now. And I can't make any predictions as to what's going to happen. But this will, of course, all be very bad for the economy, all these things, the bailouts and all this. and it's up to us to point this out and explain to people I remember after the collapse of socialism I recommended and no one listened to me that we hold a big conference on why socialism failed even though we you know right here we've been

14:48talking about this forever but you know aimed at the general public to have a book out there that would explain to everybody you know why this happened so that it doesn't happen again and and here you are you have a president getting I was writing about Acorn 25 years ago. I published a book in 1985 entitled Destroying Democracy, How Government Funds Partisan Politics. It was about government actually writing checks, giving money to special interest groups who would lobby for bigger government. and with James Bennett was my co-author and we had a section in there on Acorn and they were one of the groups that were getting government money back then, 25, 30 years ago and they were the craziest of the crazy socialists, they were communists, they were in the nationalized power industry, the medical care industry, the housing industry, communists basically and Obama is their lawyer and so I think we need to I've realized that and when he says I want to transform society, that's the direction he wants to transform it in and all we can do now is try to educate the public and wake them up, give them a good head slap, so to speak, and try to educate them on what's going on, I know we do have Rush Limbaugh on our side, I don't like Rush that much but he's getting better now as a lot of the conservatives are because they realized what the fight is right now and that's all I'm going to say.

16:23Thank you very much.