(Interviewed by Louis James, Editor, International Speculator)
L: Doug, we got
a lot of mail last week. I screwed up – I was thinking of the
much-abused "general welfare" clause in the preamble to the US
Constitution when I said the "interstate commerce" clause was in
the preamble. The power to regulate commerce between the states is indeed
granted to the federal government in Article I, Section 8. Both the
interstate commerce clause and the general welfare clause have been greatly
abused, and I simply crossed those wires in my mind. I apologize to our
readers for the error.
Doug: I didn't
catch it either… it pays to research everything, as opposed to rely on
memory. But we're not writing dissertations; we're having informal
conversations.
That said, I think the essential point we were making
remains sound. If you look at that section of the Constitution, which lists
powers given to Congress, it says: "To regulate commerce with foreign
nations, and among the several States, and with the Indian
tribes…" This concept was aimed at a very high level, akin to
dealing with foreign nations and Indian tribes. It was meant to keep the
legislatures of the states from acting the way governments typically do:
erecting barriers and putting on tariffs.
Also, I believe the connotation of the word
"regulate" has changed considerably in the last couple of
centuries; in those days it meant simply to "make regular" or to
normalize. The idea, as I understand it, was to ensure a level playing field
between the states, since some of the states had sweetheart deals with some
states and trade barriers with yet others, greatly complicating business
concerning them all. Over the years, this has devolved into a blanket power
to control every minute detail of any good or service that might cross state
lines – or might not even do that, but could affect prices in other
states simply by existing wherever it is. What was a very reasonable intent
has opened Pandora's box.
L: I agree,
but nevertheless, I misspoke and stand corrected. That said, we've threatened
to talk about the Constitution many times. Since we've started, maybe we
should go ahead and discuss the US Constitution.
Doug: Good idea.
I confess I knew this was coming up – I saw the mail too – so I
just now read the Constitution again. This is actually something I recommend
to everyone. Unfortunately, the Constitution is now a dead letter, but
reading it is instructive in a number of ways, and it only takes about ten
minutes. One should know the law of the land, even if it no longer applies.
That will probably be enough for one conversation, but
we should probably also take up the amendments, especially the Bill of
Rights, in a future conversation, and then maybe another on the Declaration
of Independence – another short document everyone should read.
L: Well, some
might argue that since the Constitution was ratified with the Bill of Rights
attached, they really ought to be considered together, but I'd certainly
agree that the later amendments – like the ones establishing and
repealing Prohibition – should be a separate conversation.
Doug: Thank
heaven for the Bill of Rights; it slowed the descent of the US considerably,
while it was still taken seriously. So, where to begin…
L: How about
with the fact that there wasn't supposed to be a constitution? The
Continental Congress authorized delegates to gather to amend and improve on
the Articles of Confederation, not to replace them with a new
form of government.
Doug: I've read
that James Madison of Virginia showed up with a document called the "Virginia Plan," bearing close resemblance to the
current Constitution, except that it clearly described a single, national
government. That didn't sit too well with the more independent-minded
delegates, so they struck the words "national government" and replaced
them with "United States," which went over a lot better.
Now, I wasn't there – and the convention was held
behind closed doors – so I hope readers will give me a little wiggle
room if they read a book that tells a different story, but my impression has
long been that the adoption of the Constitution was actually something of a
coup. It replaced a confederation of separate governments with a single
super-government. Many people didn't realize this at the time, or they would
have objected. The War Between the States demonstrated the reality of the
matter, when people did object.
L: I think
I've read the same books you have. Or maybe I'm just remembering our conversation on the Civil War.
Doug: People
often gush about what a wonderful thing the Constitution is, but I've always
suspected that US and world history would be different – and better
– if those delegates had done as they were told and just smoothed over the
rough spots in the Articles rather than replaced them with the Constitution.
Greater independence among the states could have led to more innovation, and
I doubt there would have been the unpleasantness of 1861-'65. People with
differing ethical values and economic interests would not have been forced to
obey the same laws.
L: Perhaps.
But they did, and we're stuck with the Constitution we have, for now.
Doug: For now.
Sometimes I think those who've called for a new constitutional convention are
on to something, because the one we have now has fallen into almost complete
disuse. People talk as though it were carved into the sacred bedrock of the
universe, but few people have actually read it, and most of those who have
seem to spend their time trying to figure out ways to get out of the clear
and simple rules it set out, rather than abide by it. People talk about how
it should be a "living document" that evolves with the times. But
those people almost always want to abolish what few limitations there are on
the government. They want to change the actual working parts of the
Constitution, the ones that define and shape the government, not the tedious
pages with "Robert's Rules of Order" type stuff governing how
motions are passed in Congress and the like. Curiously, this trivia –
about how the president of the Senate is elected and
so forth – is the only part of the Constitution that the government
still adheres to. It follows the trivia fastidiously but disregards the
important parts that designate what the government may and may not do.
L: Ah, the
irony. But a constitutional convention is a terrible idea, Doug; you know
that if we had one now, we wouldn’t get anything like enumerated and
restricted powers or the Bill of Rights. The average "educated"
person in the US has been taught that the Great Depression proved that
capitalism doesn't work; and the average couch potato believes that work is a
tedious imposition to be avoided, rather than a virtue. If a new constitution
were drafted today, we'd get unlimited and expansive powers and a Bill of
Entitlements.
Doug: [Sighs]
You're absolutely right. All institutions – countries, companies,
clubs, whatever – inevitably degrade and
become corrupt over time. That's one reason why revolutions occur in countries.
But okay, let's look at the one we've got. Some things
stand out. Let's start with the item you tripped over, the power given to
Congress to regulate commerce with foreign nations, Indian tribes, and
between the states. That was a problematical idea from the get-go. As we talked about last week, there should be separation of
economy and state for the same reason we have separation of church and state.
And there should be a separation of state and education,
and everything else that might be provided by society. Otherwise the state
will insinuate itself and eventually try to usurp the whole area. Even though
the founders' idea of "regulate" was very different from the
current one of total control, it left the door open to misinterpretation. And
now corporatists, lobbyists, bureaucrats, and influence-peddlers completely
control the coercive power of the state and use it to destroy their
competition and enrich themselves.
L: As opposed
to beating the competition in a fair contest in the marketplace.
Doug: Yes; we're
told competition is supposed to be "fair," not
"cutthroat" – although both terms are ridiculous misnomers.
But Article I, Section 8 is full of things that have been perverted or really
shouldn't be there to start with. It says the Congress has the power to coin
money and regulate its value, as well as establish weights and measures. Any
sensible person could have told the guys who wrote this that that's like
asking the fox to guard the henhouse. Money is a market phenomenon that's
quite capable of orderly evolution in a free-market environment. Governments
are not necessary to establish money and should never be trusted with a
monopoly power over money – when they have it, they always abuse
it and debase the currency. It happened in ancient
Rome and has happened again and again throughout history; it's the
easiest – but also the most destructive – way for the state to
get revenue.
L: Fine, but you're
an anarchist, and the writers of the Constitution were not. They were
practical men of their day, trying to set up a system they thought would
work. Keeping the state's grubby hands off the money supply was not an idea
they would have been familiar with…
Doug: Not really.
Bank notes back them were issued by private companies – banks, gold-
and silversmiths, and such. They issued notes stating that so-and-so had X
amount of gold or silver on deposit. Many people used all sorts of gold and
silver not issued by nor regulated by their local governments for money. If
memory serves, in the original colonies that formed the United States of
America, Spanish pieces of eight were among the most common items used for
money.
The framers of the Constitution should have known
better. And maybe they did; the Constitution gives Congress the power to coin
money, but it doesn't forbid anyone else from doing the same thing. So anyone
could have gone into the business of minting coins for use as means of
exchange and stores of value. The market would decide which were the most
reliable.
L: I wonder
when and how competing with the government on that front became a crime.
Doug: I'm not
sure it is, even today. What the government has done to people who've issued
private money in recent times, like the creators of the Liberty Dollar, is to prosecute them for counterfeiting,
which is spelled out as a crime in the Constitution – but only
if you counterfeit the currency of the United States. During the War Between
the States, a printer in Philadelphia hit upon the idea of counterfeiting
Confederate currency and made a huge amount of money for himself. He was
never prosecuted. Washington overlooked it because it aided its war effort.
But by late in 1863 it was no longer even worth the man's effort, because the
Confederate dollar had lost so much value – due mostly to the foolish
policies of the Confederate government in Richmond. I suspect that was a
major, but generally overlooked, contributing factor to the collapse of the
South.
L: I've long
thought the North's victory was largely economic, not military.
"Unconditional Surrender" Grant's bloody march into Virginia was an
insanely expensive way to beat Lee. Anyway, you may be right about
counterfeiting, but everyone has gotten the message: Money is the state's
turf, and woe unto ye if you trespass.
Doug: Yes, we
live on a prison planet. Trapped here by the aberrations of human psychology.
L: So, what
else would you list among Doug Casey's top ten gripes with the US
Constitution?
Doug: The
provision to establish post offices and post roads. The post office is a
paragon of inefficiency and bad service, was never necessary as a government function,
and absolutely should never have been a monopoly. And the first roads in
America were private toll roads.
L: I remember
reading that Lysander Spooner competed with the US Post Office in the
1840s, and did a better job at lower cost until the government shut him down.
Doug: Once again,
the power to establish post offices and post roads is given, but the
authority to crush private competition is not. The first power was later
interpreted to include the second, and so it's been with everything in the
Constitution ever since it was written. Things like this and the power to
coin money were the camel's nose under the tent flap; now the state camel has
filled the tent, and there's hardly any room for individual freedom.
L: Okay, what
else?
Doug: The item
setting up copyrights and patents was, at least arguably, another mistake
along these lines, and for the same reasons. As a writer who wants to benefit
from the effort I put into using words to communicate valuable information,
I'm a bit ambivalent about that, but I don't see how it's possible for anyone
to own an idea, and I'm sure getting the government involved is a bad move.
L: We
published a conversation with our friend Paul Rosenberg on the subject of
"intellectual property." His conclusion was that the
state's involvement has become useless anyway. All creators can do now is
adapt to the marketplace.
Doug: It's
interesting to me that in spite of all the hand-wringing on this subject, the
ongoing demise of patents and copyrights has not stopped inventors from
inventing, nor musicians or writers from creating. In fact, wikis and
open-source projects have created many valuable things. Patents, copyrights,
and trademarks really just turned into a bonanza for lawyers. I do want to
benefit from my intellectual work, but I suspect Paul is right; all we can do
is adapt.
It's also interesting to me that aside from
counterfeiting, which we've already mentioned, there are only two other
crimes mentioned in the Constitution. One is piracy, and the other is
treason. Today, nobody knows for sure how many crimes there are on the books,
but it's thought that there are over 5,000 crimes
defined in federal law. I've read that the average US citizen breaks three
federal laws every day, intentionally or otherwise. And now many federal
agencies have armed – sometimes heavily armed – branches that
round up people and prosecute them for these so-called crimes.
I suppose I could live with just three federal laws
– piracy, counterfeiting, and treason would be easy to remember, at
least.
L: But
counterfeiting wouldn't be a federal crime if we got the government out of
the money business, as you suggest.
Doug: That's
right, and piracy could be handled by letters of marque and reprisal, as it was in the old
days.
L: What about
treason?
Doug: Well…
you could look at that as the state's right to self-defense – but let
me just ask: when the state becomes unjust, what is a just man or woman to
do?
L: On an ethical
plane, the answer is clear, but on a practical plane, that's a tough one.
Doug: Indeed.
Another thing worth covering is the power to declare
war. The authors of the Constitution were rightly worried about leaders with
the power of kings to plunge nations into war for personal or imagined
grievances, so they gave the power to declare war to Congress. But like
everything remotely sensible about the Constitution, that too has been set
aside. The US has had numerous wars, one after the
other, for decades – but the last time Congress actually declared war
was World War II.
L: Really? I
thought Korea was declared.
Doug: No, that
was a "police action." Technically, it was a UN police action
against North Korea, but in reality it was a war between the US and China. At
any rate, it's just another example of how thoroughly ignored the
Constitution is in the US. The president can now unilaterally send US troops
anywhere to do almost anything. In fact, he can do almost anything,
period… at least, if media lapdogs are able to justify and rationalize
it.
L: Wasn't it
Henry Kissinger who said that doing something illegal was no problem and that
doing something unconstitutional just took a little longer?
Doug: "The illegal we do immediately, the unconstitutional
takes a little longer." You've got to admit Henry is a clever guy.
Come the day I write an obit for him, perhaps I'll subtitle it: Comedian
and War Criminal.
L: Okay, okay,
I get the picture. I don't think we need to go through every clause to see
how far the US has fallen from the America That Was. That prompts me to say
to those who think this conversation shows that we hate America that just the
opposite is true. Personally, I love the idea that was America, and I still
love the land of America, from sea to shining sea. What I loathe and despise
is the corruption being visited upon her by the maggots in Washington, D.C.
who've been gutting all that is good and noble about her.
At any rate, we've been saying for a long time that all
is not well in Mudville. Are there any practical
implications to this conversation? Investment implications?
Doug: It's yet
another sign that the US has gone way beyond the point of no return. You
can't make a sensible investment in a country which doesn't have the rule of
law; you can only speculate – which is to say, try to capitalize on
politically caused distortions in the market. There's no way the US federal
government can or will return to observing the Constitution; it's just
something it pays lip service to – and then only rarely. When you're on
a slippery slope that's rapidly turning vertical, it's no longer a question
of if there will be a painful stop at the bottom, only when.
L: Does your
guru sense give you any feeling for how close we are to that crash?
Doug: You know I
don't like to predict what and when at the same time, but I can't make myself
believe it can be put off too much longer – a couple of years at most.
And it could still quite possibly happen this year.
L: In which
case we invest for crisis, as you've been saying all along.
Doug: Yet another
reason, yes. We're headed for a genuinely historic time of troubles.
L: Roger that.
Until next week, then.
Doug: Travel
safe, and see you at our conference in Florida. Personally, I dread
and despise the interrogation and searching one gets from ICE when entering
the US. But I suppose it's no more degrading than the grope from the TSA. No
problem though – it must be somewhere in the Constitution. I better
read it again.
L: Sure, Doug,
it's right next to the clause granting everyone free
health care, free education, and a free lunch. See you in Florida.
Doug: [Laughs]
[Is an economic collapse imminent? Doug will explore
this question at the Casey Research Recovery Reality Check Summit. You
can hear it in person, along with sobering talks from other financial
luminaries, including David Stockman, director of the Office of
Management and Budget under President Reagan; Porter Stansberry,
creator of the controversial End of America video; and John
Williams, editor of Shadow Government Statistics. A few seats are still available for this very special and
timely event.]
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