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Trace:
Welcome back to the RunToGold Podcast, I have a special guest with us today, Thomas
Woods. He is a senior fellow at the Ludwig von Mises Institute, a bastion
for Austrian economics, he holds a degree from Harvard in history and a Ph.D.
from Columbia, and he has a new book out called Nullification: How to Resist Federal Tyranny in the 21st
Century.
Welcome,
Tom.
Tom:
Thanks very much, Trace.
Trace: When
I was in law school, we never talked about the 10th amendment. When I was
studying for the bar, they said if there was an answer that mentioned the
10th amendment, it was wrong. Can you give us a little bit of an overview on
what nullification is and
how the States can apply this?
Tom: Yes.
Well, it is linked to the idea of the 10th amendment and it’s so funny
how the legal establishment hates and tries to downplay, or smear, the 10th
amendment when in fact the principle of the 10th amendment, that the states
retain all powers not delegated to the federal government, was told to people
as having been implicit in the Constitution as drafted.
In other words, before there even was a 10th amendment in the Constitution,
supporters of the Constitution told people that, in effec,t it was already
implied in the Constitution. This is the very principle that law schools try
to pretend doesn’t exist or is just stupid. Supporters of the document
itself said this principle is already implicitly contained in it, so
nullification just follows from this.
Thomas
Jefferson
It
comes from Thomas Jefferson, and then in turn through
others since then. Jefferson said that if the federal government tries to
exercise a power that is not one of the delegated powers, tries to exercise a
power that would be unconstitutional, then the states should not enforce it
within their borders. That is to say they should nullify it. And Jefferson
himself is deriving this idea from the Virginia ratifying convention of 1788. 1788 Virginians
were very skeptical of the constitution, a lot of them were. Virginia was
probably the most important state at that time, and so many of our great
states men came from Virginia. I mean obviously James Madison, Thomas
Jefferson, Patrick Henry, George Mason, the list goes on and on, so
it’s very important to get Virginia in. And then there were skeptics, Patrick Henry among them, who said this constitution
is going to yield you a government that will be impossible to control. It
will grow beyond our ability to imagine, it’s got a phrase in there
that can become loopholes for ambitious politicians. And Patrick Henry was
told “don’t worry”, and this was the supporters of the
Constitution talking, “don’t worry, the federal government will
have only the powers expressly delegated to it, and if the federal government
should attempt to exercise any additional powers, don’t worry. Virginia
will be exonerated from those additional powers.” So in effect there is
the germ of nullification right there, in the state ratifying convention.
Now
this is not talked about, the stuff I’ve just said… I mean you,
if you picked up in American history textbook you’d be more likely to
read that I, Tom Woods, am the King of England then you would to read any of
that history.
Trace: That
goes right along with our principal of judicial review, which is outside the
scope of this interview, is that there are certain things that the
establishment out of Washington definitely doesn’t want to talk about,
and nullification is one of those.
How
can nullification, and this principle, help a state become an attractive
place for capital, both human and economic? A place where people want to go
and do business there, because you know we’ve got these huge unfunded
liabilities that are hanging out there like a Damocles sword on the economy,
we’ve paralyzed the entrepreneur, and they are withdrawing from
engaging in the economy, providing value, because we’ve got all these
regulations, just pages and pages that come out in the Federal Register. How
can the states use nullification to create an attractive business climate for
people?
Tom:
That’s a good question. Let me start by saying that when you’re
in an economic crisis, such as the one we continue to be in, I think people
become willing to entertain ideas that they would otherwise reject, that
people are willing to put a lot of possibilities on the table, they become
skeptical of experts, they become more willing to listen to heterodoxy. So
certainly we saw that in the sudden meteoric rise in the interest in the
Austrian school, mostly due to Ron Paul, but also simply because in an
economic crisis the experts don’t seem to know what on God’s
green earth caused it, and yet these Austrians seem to have been calling it
for quite some time, and they have an explanatory basis for accounting for
it. Suddenly people became interested in that. Well, likewise of
nullification. I think people five years ago would say “well,
that’s some crazy idea”. Well, first of all it’s not a
crazy idea. I think my hope in my book
Nullification is to show how non-crazy it is, how based it is in American
history, and the Constitution, common sense, morality, everything you can
name, demands that you have the power of nullification.
But I
think now… could you imagine, let’s say even right now but
let’s say how about in four or five years from now, let’s say
that economy is still stagnating, no sign of recovery. Or maybe it’s
worse, it has dipped down substantially, and I mean that is certainly quite
possible. Let’s suppose that you had a few charismatic governors from
influential states who said “All right look the federal government
obviously is not interested in economic recovery, and they have proven that
in their policies, and so okay maybe they want to bring the country down and
destroy it and ruin the economy, but I’m the governor, I’m
responsible for the people in this particular states. And in this state we
are going to try to carve out some type of livable existence here. We are
going to try to carve out the most attractive business climate that we
possibly can. So, beginning tomorrow, I am hereby appointing the following
commission to go through state budget line by line, I want you to identify
every single line in which we are spending money on some unconstitutional
federal mandate that we know and they know perfectly well are unconstitutional,
and from now on we are just not doing it anymore. The money does not exist,
there is no more government fairy who’s going to produce money out of
thin air, the game is over. And we are just not doing it.” Now there
would be tremendous popular support particularly in certain states…
Trace:…
like Texas.
Tom:…
where the Governor would have the guts to do that. Yeah, like in Texas.
Unfortunately the problem with Texas is that anybody who manages to get
elected as governor of Texas, always has ambitions to become president, and
that usually clouds his judgment. He always feels like “I’d
better be restrained, I better not do anything that’s not in the John
John
McCain and Mitch McConnell
McCain/Mitch
McConnell play book. You know I must stay Mr. Moderate”. So
unfortunately, maybe they wouldn’t do that. On the other hand, maybe
there would be some governors who would realize that there’s popular
support for this. Chris Christie is getting a lot of support in New Jersey
for just saying we’re slashing and burning, because this is absolutely
necessary. Well add the slashing and burning, combine that with… oh and
by the way we are sticking our middle finger in the face of the Feds who are
imposing unlawful requirements on us, and they are contributing to our rotten
economy.
I’d love to sit back and watch the fireworks.
Trace:
…and especially if you get a state that’s got enough critical
mass, I mean Texas or Florida or who knows maybe even California,
because it’s such a mess out there budgetarily…
Tom: Yeah
exactly, look obviously we have to do this, we do not have the money. Or I
wonder if even conversely it might be the case that if we had a couple small
uninfluential states do it the federal government might figure it’s not
even worth bothering them. Who cares if North Dakota isn’t forcing’ No Child Left Behind’,
we’ll live with it. But it would be a precedent for the future .
Trace: …and
we have seen what they have done with their state banks. North Dakota, or
another small state, like a New Hampshire could…
Tom:
…and I should point out with regard to the economy we are hearing about
cap and trade back on the table again. There are already
several states drafting cap and trade nullification, let’s say I would
assume North Dakota would have to be on board there. I mean theirs is a
completely energy-dominated economy, I mean that’s what they do. They
would be ruined, they would be completely ruined by that stuff. So if they
can get away with that, or just the prospect of annoying the federal
government and reminding people that it is possible to say no to these guys,
well you know I can’t guarantee that this is going to work, I can
guarantee you that staying on the path we are on, just voting for some stooge
every four years, that that certainly is not going to work.
Trace:
Sometimes it’s just in a mere flexing of your rights that you are able
to exert a lot of political pain. I know whenever ideal as law enforcement
officers in it’s “no officer I don’t consent to any
searches,” or “officer, am I free to leave?” Just to exert
the constitutional rights instead of rolling over like some dead possum and
letting him pilfer through all my belongings when I know that they’re
not going to find anything, so I don’t want to be wasting taxpayer
money in that way, so likewise I think they’re going to see a little
bit more, especially as the money continues getting tight, between states
competing for the capital, getting people to move there, because you know the
young people they’re coming out of school now with 19.6% unemployment,
and what happens when immigration starts happening in the opposite way, when
people are like, oh man there are plenty of jobs over in Hong Kong. And so
the best and the brightest start leaving America as opposed to coming into
it. We see Texas already catering to the young people, trying to bring the
job climate in favor and create jobs for the young people, do you think we
might see some of the states working in this manner to attract that capital?
Tom: Yes
absolutely. Certainly just taking everything it in their own power, you know
their own state sales, property taxes and things like that, certainly they
can do all that. And then you can couple that with attempts to stand up to
the Feds. Even the best-known case of nullification in American history is
when South Carolina nullified the tariffs in the 1830s and what wound up
happening is that the federal government reached a compromise with them and
said “All right, about if we lower the tariffs over the next 10
years?” Well all of our historians are big nationalists, and they hate nullification.
All of our historians say “well that just goes to show that
nullification is a failure and it doesn’t work”. Are you kidding
me!? That’s exactly how it’s supposed to work. Where both sides
say look I’m not going to do what you want in you’re not going to
do what I want so now let’s make some type of agreement. That’s
exactly how it’s supposed to work.
Trace: And
that’s to show that, you know we’ve got the political framework
at least somewhat there that we can work our way out, you know we could come
to grips with the problem we’ve got and we could solve it, and still
have our institutions and be able to provide a climate where we can still
have a nice standard of living, we don’t have to go back into the stone
age, or become an Argentina.
Tom: Yes,
exactly right. And yet that is exactly where we are heading, if we
don’t begin thinking in a different way.
Trace: This
has been a fascinating interview, Mr. Woods. Thank you and we are out of time
so everybody you have been listening to the RunToGold.com podcast thanks.
That was wonderful interview with Tom Woods, very powerful. And I recommend
you look at www.TomWoods.com,
that way you can learn more about his work and get a copy of Nullification.
Trace Mayer
RuntoGold.com
Trace Mayer,
J.D., holds a degree in Accounting from Brigham Young University, a law
degree from California Western School of Law and studies the Austrian school
of economics. He works as an entrepreneur, investor, journalist and monetary
scientist. He is a strong advocate of the freedom of speech, a member of the
Society of Professional Journalists and the San Diego County Bar Association.
He has appeared on ABC, NBC, BNN, many radio shows and presented at many
investment conferences throughout the world.
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