 
Secret Sauce

The Founders' Original Recipe for Limited American Democracy

Bob Zadek & Guests

<http://bobzadek.com/>
Copyright © 2017 Bob Zadek

All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author.

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Featuring

Donald J. Boudreaux

Thomas Fleming

William Maurer

Clark Neily III

Alex Nowrasteh

Ilya Somin

& Todd Zywicki

BobZadek.com/
CONTENTS

Introduction – We Are All Libertarians

1 - Was the Ratification of the Constitution a Mistake?

Thomas Fleming on the Constitutional Convention

2- Repeal the Seventeenth Amendment

Todd Zywicki on Direct Election of Senators

3- Is America Doomed by Voter Ignorance?

Ilya Somin on *Democracy and Political Ignorance*

4- Property Rights for the Politically Powerful

William Maurer on Eminent Domain

5 - The Second American Revolution NOW!

Donald J. Boudreaux on Debt, Deficits & Bailouts

6 - Let Them All In

Alex Nowrasteh on Immigration

7 - Recentering the Constitution on the Individual

Clark Neily on Judicial Abdication & Economic Rights

8 - Lessons in Leadership

Thomas Fleming on *The Great Divide: The Conflict Between Washington and Jefferson that Defined a Nation*

Appendix I – Original Shows

Appendix II – Featured Books
ACKNOWLEDGMENTS

I am grateful to each of the guests who agreed to have their interviews included in this book, and to my producer, Charlie Deist, for transcribing, editing, and compiling them in this format. Thanks are also due to Raymond Tennyson, my long-time board operator at KKSF, to Anne Dana for her helpful comments, and Kyle Bigman, for his editorial assistance.

# INTRODUCTION

WE ARE ALL LIBERTARIANS

In my time on the radio, I've interviewed hundreds of guests on topics ranging from educational choice to foreign wars; from the Federalist Papers to food freedom. This book features transcripts of some of my most memorable conversations.

I began hosting The Bob Zadek Show to explore what I believe to be the core principles – shared by almost all Americans – that made America great. The show's motto is "ideas, not attitude." The ideas from my guests in each chapter have been neglected by the majority of pundits, although they contain answers to the most pressing problems facing America today. Ideas have always been the "secret sauce" of the American experiment in republican democracy. Our founders risked their lives and their sacred fortunes for the idea of self-determination, yet they were also aware of the dangers and deficiencies of this ancient idea. As you will learn in the pages that follow, our government is based on numerous other ideas intended to preserve personal liberty. Democracy was always meant to be a means to secure the end of freedom – never as an end in itself. This was the founders' understanding of democracy, and it is shared by today's libertarians.

When I was living in New York, there was a blackout in the late 1970s. The entire city went dark, and for years afterward New Yorkers were asking each other, "Where were you when the blackout occurred?" Then I moved to San Francisco, and the Loma Prieta earthquake hit. "Where were you when the earthquake happened," was the topic of conversation for many years.

I remember where I was and what I was doing when I became a libertarian. I was 16 years old, a social loser (never had a date, except in my mind), and was totally intimidated by girls. I had read a bit of Jack Kerouac, but didn't understand it – it was just something remote to me. However, I was yearning for adventure. I was living in Queens, and I announced to my parents one day that I was going to go to this exotic place – Fire Island, off the south shore of Long Island. I told my mother, "I'm off. I'm going to go to Fire Island for the weekend." My plan was to take the ferry across with a couple of dollars in my pocket, and to sleep on the beach with this blanket that I brought slung over my shoulder like a hobo. My mother forbade it, and I said, "Why?"

She said, "Because I'm your mother."

It made no sense to me. "Wait a minute," I said, "The fact that you're my mother is irrelevant. I want to go to Fire Island. Either convince me on the merits that I shouldn't go, or else I'm going." We fought about it a bit and she didn't convince me on the merits. It seemed an arbitrary infringement of my freedom (although, I never would have used those words when I was 16, and certainly not when thinking about my mother, who was arbitrary in any event). I remember telling her on our front porch, "You tell me bad things are going to happen – it's much better for me if I experience those bad things myself and learn on my own that you were right, rather than blindly follow your advice."

Off I went to Fire Island. I had the most absurdly boring and lonesome weekend imaginable. I slept on the front porch of somebody's house. It was cold and uncomfortable. I did not sleep on the beach as I imagined. Despite the dearth of thrills, I came back flush with this feeling of freedom. Bad things did not happen to me despite not obeying my mother.

My mother didn't get it. She was hardly a libertarian – she was a just a strict mother (not quite a despot, but close enough in my world). I think that was the day that I became a libertarian in a rebellious 16-year-old way. I certainly wasn't focusing on free markets and limited government. I was focusing on "limited Mom," but the principles were the same.

Where were you when you first became a libertarian, and what does it all mean to you in today's economic and political environment?

Back in 2010, the Republicans published a document with great fanfare, called the "Pledge to America," stating: "We pledge to honor the Constitution as constructed by the framers." Republicans talk about "honoring the original intent." Those are red-meat words for conservatives (which I am not) and Republicans. Whose original intent are we talking about? Republicans would say, "The original intent of the framers." I say, hmm ... let's see. Thomas Jefferson was a framer, sure. Alexander Hamilton was a card-carrying framer. Thomas Jefferson and Alexander Hamilton agreed on nothing – nothing – when it comes to the Constitution. Therefore, what does "the original intent of the framers" mean if we are talking about the original intent of Alexander Hamilton? George W. Bush and President Obama were probably following the original intent of Alexander Hamilton, who favored a very strong and powerful central government, but not of Thomas Jefferson.

The words "original intent of the framers" are a hollow, empty, shallow political phrase with no substance. When we talk about the intent of the founders, which founders are we talking about? If you say, "No, the original intent of James Madison, he wrote the Constitution – or at least the first draft. Let's take his original intent." Well, James Madison was furious at the final product, which we call the Constitution. He was grossly disappointed in many ways as to how it came out, because the Constitution was a political document. It was a profound compromise that was made in order to get the country created, which was the goal of every founder, even if they couldn't agree on the principles. There were parts of it that Madison hated and that did not represent his worldview, although he vehemently supported and lobbied extensively for the enactment of the Constitution through The Federalist Papers.

It gets even more complicated. James Madison had strongly held beliefs about how powerful the executive branch should be, and he changed his mind three times on this crucial issue between 1790 and 1800. If he couldn't even agree with himself over a ten-year period, then which original intent and which founder are we talking about?

Here's my point: We are reliving today, in an exciting way, the same fight the founders had in secrecy from May to September of 1787. The founders had a set of principles, and they were struggling to draft a constitution which embodied those principles. They created a country, which has worked vigorously and will continue to work. The country is stable and will survive. The Constitution works.

However, the principles on which the Constitution is based have less and less to do with the Constitution itself, as interpreted by the courts. Therefore, if you care, you should not vote according to this empty fealty to the framers' original intent, but rather the principles that drove the framers, which are clearly libertarian principles. The test of whether any political party gets it right is not how they see or interpret the Constitution, but how true or untrue they are to libertarian principles.

If the Republicans want to win over the hearts and minds of libertarians, who make up roughly a quarter of the electorate, they must honor libertarian principles. Taking an oath to the Constitution as originally intended is an empty oath, which tells us nothing about what they believe. We have to examine their loyalty to libertarian principles.

What are libertarian principles? They're very simple and I think everybody out there within the sound of my voice (as they say in radio) subscribes generally to libertarian principles. They can be ticked off in a few moments.

Individual rights: Libertarians believe that the smallest unit in government is an individual – not a group. Therefore, laws are tested insofar as they affect individuals, not groups. The dignity of every individual matters. No group identification. No disabled, blacks, Hispanics, poor, rich, middle-class, male or female. "American" is the only classification, and we are all individuals. Jefferson wrote in the Declaration of Independence, "Life, liberty, and the pursuit of happiness." He changed the word property, which was a Lockean concept, to pursuit of happiness. He wanted to include virtue and other strongly held principles. Furthermore, we have the rights of life, liberty, and property because we are human beings. They are not rights granted to us by the government. The government doesn't give us rights. No way! We give the government rights. Individual rights is a core principle of libertarian beliefs. In short, rights preceded government.

Rule of law: Laws are created only to protect person and property, i.e., to protect our individual rights. That's the only legitimate purpose of government. Laws aren't created to transfer wealth from one person to another. They are created to protect our inherent rights as human beings and that is the only purpose of laws.

Limited government: Libertarians abhor power. We all know the Lord Acton quote, "Power tends to corrupt and absolute power corrupts absolutely." We fear any accumulation of power, which is why the framers drafted a Constitution with checks and balances: to limit the power of government and of each of its branches, and to divide power between the states and the Federal Government.

Finally, the principle of free markets.

Who out there doesn't believe in those principles? In trying to heal the wounds between the Federalists and the Anti-Federalists in his first inaugural address, Thomas Jefferson said, "We are all Federalists. We are all Anti-Federalists." I close this segment by saying, "We are all libertarians."

My full archive of shows is available at BobZadek.com/subscribe. Every week I interview a really smart guest. Hear my show streaming live or on the radio every Sunday morning. Check your listings at BobZadek.com/listen-live.

# 1 – WAS THE RATIFICATION OF THE CONSTITUTION A MISTAKE?

## Guest: Thomas Fleming

Interview Date: October 21, 2012

Bob Zadek: In my time on the radio, I have sometimes spoken with unconditional praise for the Constitution and its drafters – specifically James Madison. I have bemoaned Supreme Court decisions and efforts by Congress to alter what I perceive to be the original intent of the Constitution.

However, after I started reading about the ratification process – the four and half months in Philadelphia beginning in September 1787, after the founders had drafted a constitution with important compromises – I became curious. The framers created a process in which each colony was invited to form a convention to review the Constitution, discuss it, and decide whether to ratify it. The drafters concluded that once the Constitution was ratified by nine colonies, then at least there would be a country with those nine colonies, plus any other colonies who chose to ratify afterwards. Ultimately, 12 of the 13 colonies ratified, and all 13 ultimately became states. Thus, we have the United States.

Specifically, I started to read the arguments of the patriots who opposed ratification – the Anti-Federalists. Here were some pretty smart men: George Mason, Edmund Randolph, Robert Yates in New York, George Clinton, DeWitt Clinton, Patrick Henry, and many others. They were as patriotic as those who supported ratification of the Constitution. In reading the arguments and predictions of the Anti-Federalists, I said to myself, "Oh, my God – the Anti-Federalists were right!" What they feared would happen after ratification, did, in fact, happen.

That called into question much of what I had believed, and I found myself confused. To straighten myself out, and to share the history of ratification with you, I sought refuge with America's (in my opinion) greatest living historian. Thomas Fleming has been on my show before, and I'm happy to welcome him again. Tom has written close to 60 books on the American Revolution, the Civil War, Harry Truman and others. Each one of his books is a must read. When I committed myself to learning all that I could about the American Revolution and American history, I started to accumulate documentaries dealing with the period of our country's founding. So often, Tom was right there on the screen. He didn't know it, but Tom was my private tutor for years.

I'm happy to have Tom on the show to discuss the process of ratification of the Constitution and specifically, how the Anti-Federalists could have been so right on so many points. It was hardly the pure process that one would imagine; it was intensely political, with a lot of nasty business going on as well. Perhaps the ends justified the means, but you will decide.

The Meeting at Mt. Vernon: A Prelude to the Constitution

BZ: Tom, thanks so much for joining me on the show. I hope we will discover before we end the show some lessons about political life today that can be derived from the intensely political period starting roughly from September 1787, and ending in the early fall of 1788, when ratification was accomplished.

TF: I think that's quite possible – we'll see. The word "lessons" makes me a little uneasy to be honest, but we might find a few principles that will emerge. That's why it's such fun to get together with someone like you, who knows the subject, and kick it around.

BZ: Now Tom, the drafting of the Constitution was done in great secrecy, with enormous compromises, which we all know about and study in school. Clearly, the Constitution didn't have the same philosophical purity as, for example, the Declaration of Independence, which was pure in its statement of principle (putting aside the accusations against the King). The Constitution was hardly pure. The founders felt they needed something that could be passed, since they believed this was their only shot, so each of them made compromises because they didn't want to fail. No founder – especially not Madison – would embrace the Constitution itself as being the perfect product. If I can use the phrase – and I'm not trying to be harsh – it was a "flawed product" when it left Philadelphia. Is that a fair assumption?

TF: I think the word "flawed" is unfair to apply to the Constitution. It was a series of compromises, but based on very realistic political thinking every step of the way. But let me point out something else, Bob. We had a constitution before the Constitutional Convention met – the Articles of Confederation, which was an atrocious constitution. This is something that must be emphasized if you want to understand and appreciate the Constitution.

BZ: Let's start there. The founders had the Articles in front of them, and they presumably meant to fix them. And man, did they fix them – they threw them away! Believe it or not, I'm asking whether the Constitution should have been ratified. Now, I'm not suggesting we go back and un-ratify it. I'm asking because history is a good teacher of the future. The arguments made by those who opposed ratification were wise and accurate in predicting what would happen if the country adopted the Constitution.

TF: If you want to understand why the Constitution was ratified, it's essential to understand how lousy the Articles of Confederation were. To give you one example – Washington's army is starving in 1783. The war is over, and their officers are angry that they're owed a ton of money, and so forth, and James Madison is desperately trying to make Congress into a national body, and to think in terms of national interests, instead of separate state interests. Each state had one vote under the Articles, and the Congress had no power to raise money, so they were totally bankrupt. So, Madison proposed a bill to tax imports. Under the Articles of Confederation, every state had to agree to raise money that way. The Congress had no power to tax anybody, and they could only tax imports. They had to get the 13 states to agree. And 12 of them agreed, but little Rhode Island, which was making so much money with their own trade, said, "Nah, we don't like it," and they voted "No." And, BINGO. There was Washington, who left with this enraged army, ready to march on Philadelphia and start a counterrevolution. That was the Articles of Confederation at work!

BZ: That was in Poughkeepsie.

TF: It was a very, very bad system. During the Revolution, they just printed money like it was going out of style, and by 1780, there were something like 220 million paper dollars in circulation. The phrase was, "It's not worth a Continental" – meaning a Continental dollar. The stuff had depreciated to waste paper. This was the kind of government that everybody had gotten from the Articles of Confederation, and this was why Madison went to see George Washington at Mount Vernon in 1785.

Madison had been in Congress, and Washington had grown to like him because he was trying to think in national terms, which practically nobody else in Congress was doing. At Mount Vernon, they started talking about what could be done to change the government. Over the next year and a half or so, these guys worked out the basic ideas of the Constitution. It's an amazing and little understood story – that's where it all started. Washington, in particular, was very anxious to have this Constitutional Convention, and especially because of one event.

BZ: Shays' Rebellion.

TF: Yeah, you got it: Shays' Rebellion. Shays was a farmer from western Massachusetts – a former captain in the Revolutionary army. Taxes in Massachusetts were pretty high, to pay off the state's debt from the Revolution. These guys in the western part of the state couldn't pay the taxes, and courts were starting to seize their farms and homes. Shays started a rebellion, and it was big. They shut down courts. They chased judges out of that part of Massachusetts. Very few people are willing to admit this, but it spread to other western parts of states like Pennsylvania and Virginia, where similar things were happening. This was really the threat of a counterrevolution. Congress had no money – not a cent – to raise and pay an army. They tried to raise an army of 4,400 men, and all they could do was ask the states to send them money. Nobody sent them anything.

Finally, a group of very wealthy men met in Massachusetts and raised enough money to hire a local army under one of Washington's ex-generals, and they went marching to western Massachusetts and dispersed these guys. But it was bad.

And to give you a glimpse of what Washington was thinking, somebody went to him and said, "Could you go to western Massachusetts, General? Your influence will calm this whole thing." And Washington snarled, "Influence is not a government, and that's what we need – a government."

This is a prelude to the Constitution.

Power to the People, or to the Feds?

BZ: So, the founders were determined to go to Philadelphia with a better Constitution.

TF: They thought that the future of the country was at stake. The country was totally bankrupt. Things were on the brink of total collapse. We hadn't been able to pay the millions of dollars of loans we had received from the French and the Dutch. Our credit around the whole world was absolutely worthless. No one would loan a nickel to the United States of America, or to any businessman in the United States.

Alexander Hamilton, who was a Congressman after serving as one of Washington's aides, quit Congress and wrote a letter to Governor Clinton of New York, suggesting that he offer free land to ex-soldiers from the Continental army, because he thought there was going to be a civil war, and that it would be very handy to have some well-trained soldiers in their midst.

BZ: So, the founders draft the Constitution. What's interesting, but not really taught or understood, is that as a political document, it had to be full of compromises. It goes out to the states, which were told, "Convene a convention to vote on ratification."

TF: Could I interrupt, Bob, to explain why that was done?

BZ: Sure.

TF: The great change of the Constitution was to shift the power of government from the states to the people. Everybody in Congress knew that they couldn't trust this to the state legislatures. That would've been an absolute disaster, and only two or maybe three of the states would have ratified it. They had to get a convention of the people. Now, I grant that a convention of 55 is not "the people," but they were elected by the people. So, there was an election, and a free election at that. This was the great appeal of the Constitution for an awful lot of people, and we ought to appreciate its importance.

BZ: Tom, I'm going to do something very hazardous, and I'm holding my breath and biting my fingernails down to the cuticles. I'm going to slightly, slightly disagree with something you said.

TF: Well, we're discussing it.

BZ: You say that the Constitution shifted the power from the states to the people. I would replace "people," with "general government," i.e., Federal Government. We can discuss whether they're the same. I don't think they were. Especially since the people became far removed from the Federal Government. I'm not sure it shifted power from the states to the people, and history shows, perhaps, that it did not.

TF: Well here's an answer to that, Bob. It's a republic, not a pure democracy like the Greeks had. Most of the Greek city-states were pure democracies – they just put an issue out there, everybody voted on it, and that was that. But the idea of a republic was to filter the support and the opinions of the people through forms of government. And that is one way to avoid the reckless demagoguery and anarchy that pure democracy turns out to create.

For example, James Madison wrote a wonderful essay in which he analyzed the history of the previous confederacies and pure democracies and so forth. He found that pure democracies all eventually wound up in the hands of a demagogue – a dictator, in other words. The confederacies of various kinds were all too weak; they didn't have a strong central government. Madison concluded that you had to have a compromise, which is not a dirty word incidentally. Now, we're very good friends, so I don't think I could hurt your feelings, but you've been using this word "compromise" as if it was a bad thing, but it can be a very good thing because it takes the best part of a couple good ideas – the rule by the people, and preventing a direct rule by the people, which history had shown leads to disaster.

BZ: Tom, you and I both agree, as everybody agrees, that the founders were terribly fearful and distrustful of not only pure democracy, but democracy itself. The way that I would express it is this: to the founders, democracy was one of many tools they adopted as a control on governmental power. It was one of the many checks and balances where the people got a seat at the table.

TF: Yes, and the presidency was the biggest balance that they created at the Constitutional Convention. The president under the Articles of Confederation did not even have the power to answer a letter that was sent to him. He had to send it to a committee in Congress. Congress had absolute power over the whole country, and particularly over the president. Washington thought this was such an atrocious idea. He said to Madison, "We've got to have a strong president in this new government that you and I are discussing."

Now, neither Washington nor Madison had a clear idea of how we were going to elect this president. Washington thought that the president ought to be elected by Congress! But thank God there were other people in this convention like the brilliant James Wilson of Pennsylvania, who said, "No, no, no."

There was also Gouverneur Morris – one of my favorite all-time historical characters – a big, fat guy. He had a peg leg, which he had lost while fleeing an irate husband. Gouverneur was a great womanizer, but what a gifted thinker he was! He stood up during the Constitutional Convention and said, "The president must not be the flunky of Congress." Isn't that a great line? I love it.

So, between Wilson, Gouverneur Morris, and a few others, they created this strong president that was elected by the people. There's where the people get into the whole act of the Constitution.

BZ: Well, the president is elected by the electors, so not quite by the people, but ultimately it came to be that.

TF: The electoral college was added to keep the small states happy, but basically the president is elected by the people. Only once or twice in the whole 200-year history of the country has the electoral college gotten into the act and actually made waves in any way, shape, or form. The electoral college was created because there was this uneasiness about letting the people choose. But, in practice, the people have chosen.

The Ultimatum

BZ: So, the Constitution went out to the states, and many smart people found things they didn't like about it.

TF: Yes, and they were very intelligent men, as you say. These people did have strong objections and they wrote very good essays about it. There's a huge series of publications by the Anti-Federalists, the Anti-Federalist Papers. It was edited by a guy named Herbert Storing; it's a whole shelf of a library.

BZ: I'm reading it now; it's wonderful.

But Tom, here is my point. The first issue I have is that the proposed Constitution goes out to the states and the state conventions are told, "Okay, go ahead and vote on ratification. However, when you vote, bear the following in mind: Number one, you can't change it. It's up or down. Irrespective of what you don't like, we don't care, we're not going to go back and do it again."

TF: Yes.

BZ: "Number two, when you vote, bear in mind that we'll probably never do this again – this is our one shot, so you'd better hurry up."

TF: Correct.

BZ: "Number three, we've got a lot of very big countries in Europe who are licking their chops and hoping we don't ratify so they can invade us again."

TF: All that is true.

BZ: "And number four, we'll probably end up with maybe three separate countries – the Eastern States, the Middle States, and the Southern States – all of which are going to be weak."

TF: Very likely, yes. This would've been a total disaster. Washington thought we needed this Constitutional Convention, mainly because he said, "I see one head turning into 13." He voiced this many times both during and after the Revolution. Think what that means!

BZ: But Tom, we now have ratifying conventions, and one can ask, and scholars have asked, was there really a rush? Was it really the case that it couldn't be amended? In fact, there was a Bill of Rights afterward, but that's a different story.

TF: Well, wait a minute. There's nothing in the Constitution that says it can't be amended.

BZ: No, but the ratifying conventions couldn't conditionally ratify – they couldn't say, "We'll ratify if you make the following changes." Some states did with the Bill of Rights, but that's a different issue.

TF: Well, they said they wished there would be a Bill of Rights, but they still all took that as a reasonable ultimatum. New York was very hostile to the whole idea of the Constitution.

BZ: Like my hero, Robert Yates.

TF: Yes, not just Robert Yates, though. The boss of New York too, Clinton.

BZ: George Clinton and DeWitt.

TF: And his nephew, DeWitt, who was later the mayor of New York. Clinton was the first political boss. New York was making so much money under the Articles of Confederation that they were absolutely opposed to it. Only the brilliance of Alexander Hamilton persuaded the convention to ratify it at the New York convention, and that was a really close call. They ratified it by about three votes as I recall.

BZ: My premise is that the ratification process had a taint to it, and New York is a good example. When New York ratified, nine states had already ratified. Therefore, there was going to be a country. The ratification in New York was about whether they would be part of the United States, or whether they would go to be all alone? That's hardly an objective ratification decision.

TF: Well, it was a realistic decision. What else are you going to say? This is the way it was. They all knew that if New York and Virginia, the largest state, didn't ratify, the whole thing would've gone nowhere. There wouldn't have been a government and that's all there was to it. Down in Virginia, Patrick Henry was totally opposed to this, and some other very talented people were opposed as well.

BZ: Such as George Mason.

TF: So, this was crucial. These states had to ratify it.

George Clinton then tried the conditional ratification route: "We'll ratify, but if we don't get some of the changes we want, we'll un-ratify," he said. Hamilton sent a man on horseback down to Virginia to get the message from Madison, and the message came back and said, "It's all or nothing." This was how you got results in politics.

BZ: It was intentionally political. In reading the objections of the Anti-Federalists, Robert Yates (who wrote under the nom de plume of Brutus) made some of the most prescient and clearest arguments against ratification, and some of his predictions came true.

TF: I might point out, he was a hired hand of George Clinton, Bob.

BZ: You snuck that one in, Tom – you snuck it in.

Did Brutus Get It Right?

BZ: We can learn a lot about how the Anti-Federalists felt from the writings of Robert Yates, aka Brutus. Of course, we started with the colonies having all the power. He feared that the states would virtually disappear – not politically, since they would still exist on paper, but that all the power traditionally held by the states would ultimately be transferred to Washington. He also feared that there was too much wiggle room in the Constitution, specifically the Necessary and Proper Clause. But his argument was pooh-poohed. Madison would say in The Federalist Papers, "What are you worried about? It is enumerated powers! The Feds can only do certain things. Calm down, your fears are misplaced." Brutus got it right!

TF: No, I don't agree with that. The states have not disappeared. "Consolidated Government" was another term that the Anti-Federalists used, but they called it this to make it sound like the whole thing was going to shrink down to just one guy. That would be consolidation – it would be a dictator. And it didn't happen. The states still have a great deal of authority in terms of power to run their own affairs. They control the education of their people. They keep order. I come from New Jersey and I don't have the slightest sense that New Jersey has disappeared. Everybody in New Jersey has a very strong identity that they're from New Jersey and they're proud of it –no matter how many rotten jokes you make about our state.

So, I think Yates' fear was an illusion and that's all. The point was that the states under the Articles of Confederation had all the power. You had to take some of the power away from the states and give it to the Federal Government.

Incidentally, Madison didn't like the term "federal" as much as he liked the term "national" government. Madison was the father of the Constitution, although I think George Washington was the grandfather, and he doesn't get enough credit. But it was a national government, which distributed the powers of running the country into three different branches of government. It was a brilliant transformation from what we had in the Articles of Confederation, where Congress did everything, and basically did nothing.

BZ: I don't think you would disagree that the trend, from minimum wage laws on down – encouraged by the Supreme Court – has clearly been a devolution in power of what was traditionally state domain to the Federal Government in Washington.

TF: If I may say so, I think it's a flow that goes back and forth. Although there is sometimes much more of a tendency to err toward a stronger Federal Government, especially during an emergency. For example, nobody had more power during the Civil War than Abraham Lincoln, but that was the greatest emergency we ever faced. One of the great things about the Constitution is that it can be stretched. It can give the president immense powers to get the country through harrowing crises. This is necessary if we're going to have a government that can deal with the real world.

BZ: Two words scared the daylights out of the Anti-Federalists: "direct taxes." The Constitution, to the great fear of the Anti-Federalists, gave the Federal Government the power of direct taxation, which it never had before. They feared that the Federal Government would use this ability to sop up all the taxable money, so that the states would be unable to run their affairs – there would be nothing left for them to tax after the Feds were through. Of course, that didn't happen, but certainly the Feds have been consuming a large portion of all the direct taxes that are available.

TF: No doubt about it, but the crucial question is, "Was it necessary?" You can't let the needs of the situation hang on a strict interpretation.

Jefferson was a strict interpretation guy. He had a chance to buy the Louisiana Territory and double the size of the country and he said, "Well, we can't do it. It's not in the enumerated powers. So, we'll have to have a Constitutional amendment."

Meanwhile, over in France, Napoleon is saying, "I need this money, and those jerks over there aren't buying. I'm going to drop this whole idea."

And a group of legislators rushed to the presidential palace, and said, "For God's sakes, let's pass this thing! We're going to miss the greatest opportunity ever given to a country in history!"

And Jefferson said, "Yeah, I guess you're right." And they did it.

So, necessity is the mother, not only of invention, but of stretching laws. There's a difference between breaking the law and not acting exactly to the letter of the law.

BZ: The Anti-Federalists also feared the structure and the creation of the federal judiciary – that it would, as a part of the Federal Government, be the arbiter of which powers could devolve from the states to the Federal Government. They looked on it with great distrust, because in their minds the judiciary should have sat in the states. They feared the transfer of judicial power to the Federal Government, in part, because they never experienced it before. And I think the federal judiciary has grown in power over everyday lives much more than any founder could have imagined.

TF: We could debate that for a long time. It has certainly grown, but the founders didn't anticipate the complexity of the problems that we would face, and the kind of decisions on which the court would have to rule. I think you're basically right that it's become much more powerful than they imagined it would. But again, was it necessary, or wasn't it? This is the debate.

BZ: Let us end with the answer to the question of whether they were they right or not. I wonder whether the pressure was really there to take it or leave it, or whether the country had the luxury. We'll never know, and I know that you, Tom, think they did not have the luxury.

TF: I don't think they did. They had to do something very quickly because of the economic and political situation. The country was breaking up, and this was the last chance we had to rescue it.

BZ: Tell us about your current book on the presidency.

TF: I just started working on a book about the hidden clash between Washington and Jefferson that altered our understanding of the presidency. These two men had different ideas about the presidency, and it's very interesting. I'm in the midst of exploring it now. I'm just warming up, I guess you'd say. It won't be out for a good while.

BZ: Tom, thanks so much for joining me. This is Bob Zadek – I'll see you next week.

# 2 – REPEAL THE SEVENTEENTH AMENDMENT

## Guest: Todd Zywicki

Interview Date: June 24, 2012

America / Mmmmmm America / May God thy gold refine /  
Till all success be nobleness / And every gain divine.  
– Ray Charles, America the Beautiful

Bob Zadek: A libertarian trivia question for you: What was the year when it all changed for libertarians?

What was the year that federalism died? What was the year that paved the way for Obamacare, the New Deal, Medicaid, No Child Left Behind, national drinking age, national speed limits, unfunded mandates? Answers, class? Raise your hands.

1913. The blackest year in Constitutional history. We are talking about the year in which not only the income tax was passed, but also in which the Seventeenth Amendment – the amendment that changed everything – was passed. I'm delighted to welcome Professor Todd Zywicki to the show to explain the Seventeenth Amendment, the importance of that year, and America's over-infatuation with all things democracy. Todd is a professor of law at George Mason University (GMU) School of Law and has written extensively on the Seventeenth Amendment.

If you haven't spent your days planning the repeal of the Seventeenth Amendment, then this show is crucial to you. You will become so much more interesting at cocktail parties. You will become a sought-after speaker, and you will understand the damage it caused to our country. Todd, welcome to the show.

Todd Zywicki: Thanks, Bob. I guess I've been the master of cocktail parties for quite some time now, huh?

BZ: You have been.

Not a Democracy, A Republic

You've been writing about the subject of the Seventeenth Amendment since your first law review article, back in the mid-1990s when nobody else was.

TZ: That's right. For about 20 years now.

BZ: I must say that I was envious that you had the opportunity to work with these wonderful professors and scholars at GMU, including Don Boudreaux, although you weren't at GMU at the time.

TZ: Not at that point.

BZ: You studied law at the University of Virginia, if I'm not mistaken.

TZ: That's right.

BZ: Thomas Jefferson founded the University of Virginia – it's on his tombstone. So, early in life you were getting good vibes from one of our strongest founders.

Tell us about the Seventeenth Amendment and why everything from Obamacare to No Child Left Behind has its roots in an amendment passed in 1913.

TZ: Sure thing, Bob. The way the Senate was originally composed under the Constitution, United States senators were elected by state legislatures.

BZ: Not by the people.

TZ: Right, not directly by the people. The framers established a constitutional republic, not a democracy. They had a system where the various elements of the government would be drawn from different constituencies. They created the electoral college for the president; the House of Representatives would be directly elected by the people; judges would be nominated by the president and confirmed by the Senate, without any direct democratic input; and the Senate would be elected by the state legislatures, who in turn would be elected by the people of their states.

BZ: In other words, there was very little in the operation of our government that really had its roots in direct democracy. The founders were no fans of democracy. In fact, they feared it. Only one branch of government was elected directly by the people.

TZ: Exactly. Hamilton says in one of the Federalist Papers that dependence on the people is the foundation of a free society, but that the experience of mankind has taught us the importance of auxiliary precautions – namely, a separation of powers and federalism.

The Senate was the key element that brought this whole system together. Having senators elected by the state legislatures was a protection built into the Constitution for federalist purposes. The framers clearly thought it would be both a necessary and sufficient condition for the states to be able to be part of the Federal Government directly, and to be able to protect themselves from any overreaching by the Federal Government.

BZ: Federalism is the principle of coequal centers of power, both at the state and federal level of government. Federalism assumes that the governmental agencies most responsible for the health and welfare of the people are the states. The Federal Government was there to carry out those roles that the states could not do alone. When we talk about federalism we are talking about a state-centric system of government.

TZ: That's right. The linchpin of federalism is enumerated powers – that is, powers given to the Federal Government, with the repository being in the states. It was also an important component of the bicameral system. We have separation of powers between the president, the legislature, and the judiciary. Madison said that the branch of government to be feared the most was the legislature, and to try to reign it in, not only did we create separation of powers between the three branches, but we also divided the power of the legislature itself into two different bodies, elected by two different groups, and thereby checked from running amok. The purpose of this was primarily to frustrate special interests.

The key to understanding why the framers constructed a constitutional republic and not a democracy is that they were not trying to maximize democracy. First, they wanted to preserve individual liberty, and second, to constrain the power of special interests and the politicians themselves from commandeering the government for their own purposes. That's why they were not democrats.

BZ: I want to be sure our listeners grasp the importance of what you just said. The founders were building a government first and foremost to protect individual liberty, which meant freedom from government. They did not have it in mind to build a pure democracy. Democracy to the founders was simply a tool to protect us from an overreaching government. It was not the end in itself. The founders would never have created a government where the goal was pure participatory democracy, because they feared it wouldn't have worked.

TZ: Exactly. They knew from history that democracy could be a threat to liberty as well as a means to preserve liberty. They were acutely aware of the power of special interest factions to manipulate the government in order to restrain liberty. Democracy is just one way among many that they chose in order to preserve liberty.

Special Interests and the Tyranny of the Majority

BZ: Like any well-thought out machine, that governmental design had lots of parts, all of which were dependent upon each other. The system of checks and balances that the founders designed to control governmental power and preserve liberty worked amazingly for about 100 years, but then in 1913 it all changed. Todd, what happened to this well-designed machine that had worked so well for a whole century?

TZ: During the 19th century it worked exactly like it was supposed to. There were things that the Federal Government was supposed to organize, like an army, a navy, and so on, and everything else was left to the states. Even when we would see the Federal Government expand, such as in times of crisis or wars, it would generally retrench back to its original size and bring back this balance. We didn't have what Robert Higgs has called the "ratchet effect" – of the government growing and staying large.

In 1913, however, under the onslaught of progressivism and the rise of national interest groups, we got the one-two punch of the Sixteenth and the Seventeenth Amendments. The Sixteenth Amendment basically unleashed the taxing power of the Federal Government and enabled it to reach into our pockets and take our money. The Seventeenth Amendment unleashed the regulatory and spending power of the Federal Government. It took away the one institutional check that the states had against the special interest manipulation of the Federal Government, essentially turning it over to the honor system. Elected national politicians give lip service to ideas like federalism but there's no institutional protection for it. It's purely a political contingency. We see that our senators, just like members of the House, are willing to sell out federalism in a second if they think it will help them get reelected.

BZ: When the founders discussed direct election of senators compared to indirect election through state houses, there was no disagreement. I think James Wilson was the only founder who tossed out the idea about direct election. They voted it down 10 to 1 and that was the end of it. It was so obvious to the founders that you couldn't have both houses of Congress elected by the people, because it would empower special interests. The genius of the founders was that they anticipated the adverse effects of special interests and removed that threat.

The government was not totally free, as it never could be completely. For example, the railroads were a special interest in the 1870s. But, by and large, the Federal Government was free of special interests. In fact, you quoted a statistic in one of your articles that in 1912, the House passed 21 or 22 very pro-labor pieces of legislation and only six were passed in the Senate, because the Senate was the more deliberative body and wasn't responsive to labor. They were only answerable to the states – that was their constituency. The system really worked. What was the political climate that caused it all to change?

TZ: First, it was this naïve faith in democracy, that many people still have today, a century after the Seventeenth Amendment. Perhaps even more important, though, was the rise of the progressive mindset. The framers had a system that was quite clearly skeptical about putting too much power in the hands of people through democracy and the officials who wield that power. They were concerned about preventing bad people from doing too much bad. As a corollary to that, they had faith in the ability of states and local governments and people acting through private organizations – charities, civil society organizations, the markets – to be able to solve a lot of their own problems.

With the rise of the Progressive Era, we saw the idea that the Constitution was antiquated, and stood in the way of good people doing good. Essentially, we wanted to get these elite experts, give them the power to remake society, and get rid of the separation of powers and the checks and balances that were built into the constitutional system.

I think history has told us that we were naïve, and that the framers were right to be skeptical about what happens when you concentrate power in the people's hands. I think they were right in fearing that the overall impact would be to empower special interests, and to empower our government officials themselves rather than preserving liberty.

BZ: In discussing democracy, one of the founders observed that it is no better to be dominated and ruled by a majority of people than it is to have your liberty deprived by a monarch.

TZ: Exactly.

BZ: Whether it's one person depriving you of liberty or a majority, the feeling is the same. The tyranny of the majority is just as tyrannical as the tyranny of a monarch or dictator.

However, democracy was a very potent tool to control the accumulation of power. Hamilton and Madison both knew that the indirect election of senators was important because the Senate, having the states as their constituency, would make sure that there was no accumulation of power by the Federal Government at the expense of the states. Bicameralism was a brilliant balance, but there was no discussion in 1913 of the loss of federalism. There was only a discussion of democracy. There was a discussion of corruption – of senators buying seats in the Senate – but no discussion of the loss of federalism.

TZ: The genius of the framers is captured in Madison's Federalist Paper, No. 51. He says that to preserve constitutional government, "The interest of the man must be connected with the constitutional rights of the place." It's not good enough to just send senators off to Washington and tell them to think about federalism every once in a while.

The founders understood that if you want senators to protect federalism, you have to reward senators for it. They made it so the interests of the man aligned with the constitutional rights of the place. They would be elected and reelected based on their ability to represent the views of the states as states, and protect the states from being swallowed up by the Federal Government. They understood that aligning those incentives was the cornerstone of protecting constitutional government.

BZ: The most obnoxious pieces of legislation for us libertarians, like Obamacare and Medicaid, could never have been enacted if the senators were answerable to the states. Both of those statutes represent the Federal Government telling the states how to run their states. If any senator would have supported that, they would have been fired by the state.

TZ: They would have been an ex-senator.

BZ: The states would have said, "What in God's name are you doing, man? You work for us and preserve our power!" No one believes that a senator who is answerable to his state would vote for things like unfunded mandates, where the Federal Government orders the states to do things without giving the money to do it. The founders anticipated all of this and got it right.

BZ: Now, if you have the two houses of the legislature – one elected by the people, one elected by the states – one is a check on the other. The House runs for election every two years and is therefore far more responsive to the whims of the public and to the anger of the moment. The Senate was a more deliberative body, responsible only for keeping the states happy. It was a very delicate balance but one that worked.

TZ: Since then, we've experienced what the Sixteenth and Seventeenth Amendments have wrought. In fact, in many ways the New Deal was a mop-up operation, right?

BZ: The New Deal is, as we say in transaction law, a "post-closing event." The deal is closed.

TZ: Exactly. The seeds of the New Deal were inevitable once we passed the Seventeenth Amendment. A dramatic expansion of the Federal Government like the New Deal was almost certainly going to happen. The Supreme Court originally put up a little fight in trying to protect the states through the commerce clause, but eventually backed down because of the court packing plan. They allow this massive expansion of the Federal Government. It became this huge spur to the special interest takeover and the bargains made between the national government and special interests.

The framers anticipated all that. They knew that politicians would be tempted to seize upon a crisis. As Rahm Emanuel so famously said, "Don't let a good crisis go to waste." They would use that to try to expand the power of the Federal Government. I think ideas like campaign finance reform are trying to treat the symptoms of a government that is too big, without thinking about the causes. We've undermined the constitutional structure designed to limit the ability of the Federal Government to just hand out goodies to special interests. Now we are running around frantically to try to plug the holes that we've created by our shortsighted tinkering with the Constitution, without anticipating the unintended consequences.

How the Seventeenth Amendment Upset the Balance of Powers

BZ: When I think about affecting the balance I think of environmentalism. Environmentalists find out that one species – say, wolves – are attacking deer. They get rid of the wolves to protect the deer. Now, everybody loves Bambis – they're cute and they have little tails that they wag – so it seems like a good idea to protect the Bambis from the wolves, or to protect the wildebeest from the lions. But when you mess with one unit in this complex ecosystem, you have all these unintended consequences.

In 1913, they added the direct election of senators in order to enhance democracy. After all, democracy is good, right? But you end up with Federal Government accumulating all the power that the founders desperately feared. It's important to note that they feared this amalgamation of power anywhere. They didn't want this power in the states. They didn't want this power in the people. They didn't want this power in the courts. They didn't want power anywhere, but when you mess with one small piece without paying attention to the whole ecosystem, you lose control.

As a direct result of the direct election of senators, the people in effect lost power because power devolved to special interests. For any special interest right now to control the country right now, they have to persuade one president, five Supreme Court judges, 51 senators and 218 representatives – 275 people and you have the country under your control. Whereas with the indirect election, the people cannot vote a senator out of office. A senator with indirect election is not beholden to the people, so if you are a special interest, you have to control a huge number of state legislatures in order to get to the senator. That was the brilliant balance the founders designed.

TZ: The founders said exactly that. They said that to protect against legislative overreach, you first have to get a majority of the House but then you have to get a majority of state legislatures. The analogy to an ecosystem is the right one in thinking about checks and balances. If you look at the system and say, "Well, judges are not democratic. We need more democratic judges," then you're losing the big picture of how special interests are frustrated. Liberty is protected as a byproduct of these rivalries. The framers understood that this was a more secure basis for liberty than to just appeal directly to democracy. Often it is the people themselves who are the primary threat to liberty, such as majorities looking to take away people's property, and silence people they don't like.

BZ: I dare say the Constitution would not have been adopted if not for that.

Restoring the Balance

BZ: You are at George Mason University School of Law – George Mason is in my pantheon of favorite founders. In reading Pauline Maier's book on ratification [Ratification: The People Debate the Constitution, 1787–1788 (Simon & Schuster, 2011)], we learn that George Mason opposed the constitution in its present form. One of the promises that tempered the Anti-Federalists – the people who opposed the Constitution – was the indirect election of senators, because it gave the states a seat at the governmental table.

The Constitution would not have been adopted if not for the indirect election of senators. None of the founders who drafted or supported the Constitution would support the Constitution today. Do you agree?

TZ: I agree, Bob. When you read The Federalist Papers, Madison simply says, "Few provisions of the Constitution gain such widespread support as the idea of having senators elected by the states." It was virtually unanimous at the convention to do it this way. The Anti-Federalists liked it. The Federalists liked it. Everybody thought it was a necessary thing in order to preserve the federal system and to protect the national government from special interest factions.

BZ: In the Federalist Paper, No. 62, Madison said that this was an additional impediment against improper acts of legislation. Madison knew that if we did away with the indirect election of senators you would have "improper acts of legislation." Does that describe Obamacare, or what?

TZ: It describes a huge portion of the growth of the Federal Government in the 20th century. The overwhelming amount of it is special interest legislation. People are basically using the power of the government to take from A to give to B – exactly what the framers feared would happen if you unleashed the government without these internal checks and balances.

BZ: Medicaid is a federal statute that imposes an enormous cost upon the states. Does anybody believe for one second that a senator who was appointed by a state would vote in favor of Medicaid? In fact, states were described by Madison as "ambassadors" to the Federal Government. Think of our ambassador to the UN and the vetoes we have. Well, states would be sending ambassadors to Washington in order to protect their interests.

Even the Safe Communities Act, where Federal Government requires all state and local police forces to enforce federal immigration law, could never have been passed. I get goosebumps thinking of how prescient the founders were to have anticipated the problems we have today. It's only through the amendment process that we made the country the sort of politically unhappy place that it is now. Madison knew. The founders knew.

TZ: That's right. The framers would be stunned and horrified by Obamacare. States now have lobbying operations in Washington. They have to try to persuade the Federal Government not to overrun them. Twenty states are having to sue the Federal Government because of Obamacare's unfunded mandates. The states are having to go, hat in hand, asking the Federal Government to take it easy on them, and to bring lawsuits in federal court asking the federal judiciary to protect them. I think it would have just blown the mind[s] of the framers.

Having said that, now that we've thrown this monkey wrench into the system, we need to think about what other constitutional protections were built in. Federalism is still a constitutional value even if we've gotten rid of the means to protect it. It makes it incumbent on the federal judiciary to be more interested and vigilant in protecting federalism against the improper incursions and its overreaching on the states. Randy Barnett, for instance, proposed the Federalism Amendment – a system by which the states could basically repeal a federal statute with a sufficient process.

BZ: That's Jefferson's principle of nullification.

TZ: It's more complicated than nullification by one state. People have criticized nullification in the past, but it's a mechanism by which the states can have at least modest countervailing protection against federal overreach.

Obviously, we don't want to have unintended consequences of creating new problems in tinkering with the system, but the system is so unbalanced right now, and so contrary to what the framers had in mind – it's so harmful to the principles of liberty and limited government that the framers and Americans hold dear – that I think it's time to start thinking seriously about how to restore the constitutional structure, rather than look to tinker around the edges.

It is time for citizens to educate themselves about the purpose of the Constitution, and start thinking about ways to restore that balance.

BZ: Libertarians are looking to the Supreme Court to help us, but the reason we are so dependent on the Supreme Court is that once the Seventeenth Amendment takes away the ability of the Senate to protect the interests of the states, then we are left with this Maginot Line – the last line of defense – of the Supreme Court. The Supreme Court is there because the other system was taken away in 1913. If we lose it, we end up going the way of Europe, where the states just disappear and become an agency of Washington, which is contrary to everything the founders believed, and our country changes irretrievably. It's not the country our founders gave us.

TZ: Great analogy – almost like how counties are agencies of the state government – the states and the powers of the states can, by and large, just exist at the whim and discretion of the Federal Government. The framers would certainly note the scary irony of relying on an instrument of the Federal Government – namely, the federal judiciary.

BZ: Todd, we're going to have to sign off. It was a great hour. Seventeenth Amendment – get rid of it.

America/Mmmmm America / May God thy gold refine / Till all success be nobleness / And every gain divine

# 3 – IS AMERICA DOOMED BY VOTER IGNORANCE?

## Guest: Ilya Somin

Interview Date: September 22, 2013

Bob Zadek: Hello everyone, and welcome to The Bob Zadek Show.

It's good to be back from vacation. Being on vacation means one special thing to me – I actually get to read books. I'm not allowed to read books in the United States. All I'm allowed to do is work. On this last trip, I enjoyed reading Richard Beeman's book, Plain, Honest Men: The Making of the American Constitution, which tells the story of how the Constitution was negotiated and written. I was reminded of how little enthusiasm our founders had for the concept of democracy. Most of us, when we think about our Constitution and what the Revolution was fought for, think it was to bring democracy to America so people could engage in the political activity of self-determination. Of course, that is somewhat true, but most of the important founders and drafters of our Constitution were, at best, lukewarm about the concept of democracy; they had serious reservations about entrusting political decision-making to the everyday voter.

Our system of government has been changed a great deal by Constitutional amendment and by practice. The founders were careful to limit direct voter participation because they were uncomfortable with the ability of everyday people to make important decisions with a ballot. If you think back to the government after ratification in 1788, the only direct voter participation in the political process was the election of members of the House of Representatives – the "People's House." Voters did not elect Senators. Senators were elected by the state houses. Voters, of course, did not elect judges. Voters did not even elect the president. They elected electors who elected the president.

Today, 230 or some odd years later, our country has more direct voter participation than the system of government the founders originally designed. We experience an incredible amount of political ignorance among everyday voters. Not only is there ignorance, there is a substantial amount of apathy. Polls indicate that voters are remarkably uninformed about the issues they need to know about to make a decision. Voters don't seem to care about the issues and don't vote in particularly large numbers.

Here we are, living in a world of greater structural voter participation than the founders envisioned, with voters who – in surprisingly large numbers – haven't got a clue about the issues they're voting on!

What does that tell us about our political health and where we are going? How are we affected by political ignorance and what should we do about it?

To discuss this with me, I'm delighted to welcome Ilya Somin. Ilya is a professor of law at George Mason University School of Law. He focuses on constitutional law and property law issues, and is the author of Democracy and Political Ignorance: Why Smaller Government is Smarter.

Ilya, welcome to the show.

Ilya Somin: Thank you so much for having me.

Direct Democracy: Too Much of a Good Thing?

BZ: Ilya, I trust my introduction was reasonably accurate in describing how unenthusiastic the founders were at the prospect of voter participation in many of the political issues confronting America.

IS: I think that's right. There were different views among the founders but most of them were very worried about the problem of voter ignorance. They wanted some political participation – particularly to check the power of elites and the wealthy – but they were also greatly worried about ignorance. It was one of the reasons they significantly limited the role of popular participation in the government they set up. Also, many of them were extremely concerned about what they saw as ignorance-driven excesses in state governments in the 1770s and 1780s; this was one of the primary reasons they wanted to establish the Constitution. People like James Madison, Gouverneur Morris, and others among the founders believed that the public was often ignorant about politics and also irrational in the way they evaluated the information that they had.

BZ: James Wilson, in Philadelphia, was also unenthusiastic about the prospect of a widespread democracy. I want to make sure my friends out there grasp the importance of what you said. To the founders, democracy or direct voter participation was not the end in itself but rather one of the checks and balances on the excesses of government. It was simply a way to make sure that those in government ultimately knew that if they didn't behave in a way the voters liked, there would be retribution at the polls. Democracy was not the end in itself. It was simply a tool.

IS: I think some of them did value a degree of popular representation in government as an end in itself, but that didn't prevent them from being very suspicious of it as well. Obviously, for at least some of them, the main function of democracy was to check the behavior of government officials and other political elites.

BZ: With that as background, you chose to write a book entitled, Democracy and Political Ignorance. What troubled you, and what issues did you feel needed to be brought to the attention of the political audience in America?

IS: I've been interested in this issue for at least 15 years, since I was a student. Voter ignorance has an effect on almost all the other problems in government policy. For almost every major issue out there – whether it's the spending crisis, gay rights, racial discrimination, economic regulation, environmental policy, or almost anything else – if you look at the survey data on what the public actually knows about that issue, most of the time you'll find very substantial ignorance. That ignorance, in turn, feeds back into government policy and very often has a negative effect.

This issue affects almost every other political issue we care about, because to the extent that public opinion influences policy, an ignorant public's influence will often be a bad influence – or at least not nearly as good as it could be if they were not ignorant. It might be going too far to say that this is more important than any other problem in our democracy – there are, unfortunately, lots of contenders for that title – but it has a significant impact on all of the others, and it tends to make them worse.

BZ: Give us some examples of what you mean by political ignorance.

IS: Sure. Look at this big debate about the federal budget and what should be done about it. Most of the public has very little understanding of how the Federal Government actually spends its money. Most of the public greatly overestimates the amount of money spent on foreign aid. They think at least 5 percent to 10 percent, or even more, of the federal budget is spent on foreign aid. In reality it's less than 1 percent. On the other hand, the public greatly underestimates the amount that's spent on big entitlement programs like Medicare and Social Security. As a result, the public thinks we can deal with the federal budget crisis perhaps by cutting things like foreign aid without focusing too much on the actual big spending items. Similarly, we are now having a big debate on Obamacare and its future. A poll conducted in April by the Kaiser Foundation found that 42 percent of the public doesn't even realize that Obamacare is still the law.

BZ: 42 percent of Americans don't realize Obamacare is a law?

IS: Many people do. 42 percent don't.

BZ: Oh, my goodness.

IS: A month or two later, they found that 79 percent say they've heard nothing or very little about the Obamacare exchanges, which are a central element of the law. That's how a very large portion of the population would end up purchasing their health insurance in the future once Obamacare is fully implemented. This is fairly basic stuff that large portions of the population don't know. You can say that knowing this basic stuff is not by itself sufficient to have a well-informed opinion on the issues, but even if it is not sufficient, I think it is certainly necessary for most people. If you want to have an informed opinion on how the fiscal crisis should be dealt with, it helps to at least know the basics of where the money is currently going.

BZ: To just help you be a little more relaxed, I have done an informal poll, and 100 percent of my listener audience knows these issues backwards and forwards. If we were a cross section of America, your book need not have been published, but unfortunately the rest of the country is not a mirror image of my audience.

You also point out in your book that there is ignorance not only about specific issues, but more basically about the function of our government. That is, if things are going wrong, it is crucial to know who to blame. The Executive Branch? The one you voted for in the House of Representatives? Your Senator? The Judiciary? There is widespread confusion about who is to blame. If something in your life is not right and you want to punish somebody at the polls, you have to know who to punish. You can't just wail at the moon and complain.

How widespread is the lack of knowledge about the basic operation of government?

IS: It's a pretty significant problem. A 2006 poll found that only 42 percent of the public can't even name the three branches of the Federal Government: the executive, legislative, and judicial. Perhaps even more importantly, the public often has trouble distinguishing between events where we can give credit or blame to a politician and those that we cannot.

For instance, various studies find that the public often rewards and punishes incumbents for short-term changes in the economy that they very likely had nothing to do with causing. On the other hand, they often ignore things that the incumbents did have more of an influence over. If you look at local and state elections, incumbent politicians get a boost when local sports teams win championships, even though the incumbents (with rare exceptions) obviously didn't cause that. We also find that if there is a drought that reduces farm prices, governors in farm states are more likely to be blamed for that even though they obviously can't control whether there's a drought or not.

There are many similar examples showing that the fundamental problem – both in terms of figuring out how to assign responsibility and also in terms of learning about the issue – is that there is very little incentive for the average voter to spend more than the minimal amount of time and effort learning about politics, because the chance that any one vote will actually make a difference in an election is infinitely small. It may be about 1 in 60 million, very roughly speaking, in a presidential election. It's somewhat higher in other elections but it is still very low. If you're not a person who is inherently interested in politics, and your only reason to acquire knowledge about it is to become a better voter, that turns out not to be much of an incentive at all. Instead, you work, you spend time with your family, you watch reality TV, but you don't spend a lot of time and effort to learn about politics.

Why Ignorance is Rational

BZ: Ilya, the point you just made is really important. When I brush my teeth in the morning, I'm reading political blogs. I will interrupt my work day to sneak online to see what's happening, politically. I talk with the person in front of me at the grocery store checkout counter about repeal of the income tax law. I live and breathe this stuff so I can ask good questions on my show on Sunday.

You point out, in your discussion of rational self-interest, that I am totally loony. I am wasting all of this time. Those who pay no attention to the issues of the day are, in this regard, far more rational than I am. Expand upon this concept of rational self-interest and why, in a manner of speaking, it makes no sense to be informed.

IS: It makes very little sense to be informed beyond the minimal level if your only reason for doing so is to become a better voter or to try to improve the quality of government, because the chance that you'll have an effect is very low. However, becoming a better voter is not the only reason people might want to acquire political knowledge. Just as there are people like me who are sports fans, who acquire knowledge about sports, not to influence the outcome of games, but because rooting for our favorite team is fun. There are many people who are what I call "political fans." They enjoy following politics. They like cheering on their favorite party or candidate, and so forth. Such people are only a minority of the population, but they certainly exist.

BZ: You're talking to one.

IS: I don't think it's irrational to spend a lot of time learning about politics if you actually enjoy it. However, problems exist.

BZ: I'm totally consumed by it. I can't explain why. Of course, I live in a world which is a de facto support group because most of the people I self-select to socialize with are the same way. In my world, I think everybody should do that, because the country would be a better place. Of course, everybody is not going to do it. Since one vote makes so little difference, it almost makes it hard to defend the act of voting.

I could ask my listeners, "Why in the world would you waste your time voting? It doesn't matter. Just get a life and never vote again." Now, that is an outrageous statement, but it's pretty rational. It makes no sense to vote.

IS: Voting is a little bit different from becoming informed because it takes about an hour of your time at most. It turns out that if you care about your fellow citizens and think there's a substantial difference between the two sides in terms of how good their policies are, it makes rational sense to vote because voting is an extremely low-cost activity. On the other hand, it doesn't make rational sense to acquire more than the minimal amount of political knowledge, because that's much more costly in terms of time and effort, so the equilibrium is what you actually see in the real world: large numbers of people voting, most of whom don't know very much about what they're voting for or against.

I wonder about the people that you mentioned, the "political fans" as I call them. I think those people know more about politics than the average person does. However, they suffer from another important problem: they often do a poor job of evaluating the information they do know. If your goal in acquiring political knowledge is primarily to enjoy the process of being a political fan and cheering on your side, you're going to tend to overvalue any information that confirms your pre-existing views, and ignore, or at least undervalue, anything that cuts against it. Ironically, many studies find that the people who know the most about politics are some of the most biased in the way they evaluate the information that they know. For those individuals, it is rational behavior, because their main goal in worrying about politics is to enjoy being political fans, rather than get at the truth. In terms of the overall effect that it has on politics, you get some bad results.

BZ: Political ignorance, as Ilya points out, is rampant in America and perhaps in the world. People who exercise their right to vote are, as indicated by polls, remarkably ill-informed. People do not take much effort to become informed because ... why should they? You cannot affect very much in your life by voting. Some people vote out of a sense of duty, but I would argue that sense is perverse.

If you're going to be uninformed and vote, then your duty is to not vote. If you want to vote, you do have a duty to become informed. When you're not informed, voting violates a duty (that is, if you have one at all to your fellow Americans).

I heard the idea that if you have a bunch of uninformed voters they will zero each other out – that uninformed Democrats will be offset by the uninformed Republicans, so the informed people will carry the day. Do the statistics bear that out?

IS: There are important scholars who have argued that. However, this is only likely to work if the errors in one direction almost exactly offset the errors in the other direction, i.e., those who cast uninformed ballots out of ignorance for the Republicans are exactly offset by those who do so for the Democrats.

The data that we have on most issues suggest this isn't true, and that on most issues, if you increase people's knowledge, the distribution of opinion changes significantly. By the way, it's not simply a matter of whether you vote for Republicans or Democrats. The choices those parties put in front of us are influenced by the fact that they know they are facing a largely ignorant electorate. If the electorate were more knowledgeable, we might see different candidates. We would almost certainly see different party platforms. It's not just a matter of the voters doing a good job of choosing between the options before them. It's also a matter of the options themselves. These would likely be significantly different if the voters were better informed, because the political professionals know the polling data and know that when you run to get the support of a largely ignorant electorate, you need a different strategy and a different platform than when you are facing people who are more informed.

BZ: In your book, you point out that maybe the most important issue in the 2010 midterm elections was economic policy. The recession had been going on for three years or more, and Obama's stewardship over the economy was being called into question. People were voting on the Democrats' handling of the economy. You and I will probably agree on which economists are right, but economists who spend their life worrying about such things are in honest disagreement as to the proper economic policies to follow. How can voters acquire the lifetime of economic knowledge required to decide whether a Keynesian approach of heavy government spending to boost the economy or an approach of less regulation and lower taxes is better? Forget about motivation – nobody could ever acquire enough knowledge to really vote for the right economic policy.

IS: It's certainly true that it's impossible for a voter to know as much as economists do, but we see in the data that they don't even know basic things that even non-economists can easily find out or understand. In the 2010 elections, two thirds of the public didn't realize that the economy was actually growing as opposed to shrinking. That, by itself, is perhaps not enough to tell you what the right economic policy is, but it is at least a very valuable piece of information to help understand that debate. There are also some issues that even the most sophisticated experts disagree about, but it's worth knowing that the majority of public opinion is often wrong about a wide range of issues where even most experts – liberal, conservative, and otherwise –tend to agree.

For instance, economists overwhelmingly agree that free trade is good for the overall economy. The voters, not quite as overwhelmingly, but still a majority, historically almost always disagree and tend to be more protectionist. Similarly, the voters in many surveys tend to be very pessimistic about the impact of technology and the economy. They worry that new technological developments will harm the economy because they throw people out of work, whereas economists on both the Right and the Left overall have almost the opposite view that technological development is actually enormously good for economic progress.

There are many other examples of issues where experts have a high degree of agreement – not universal agreement, but a high degree – and the voters don't realize that. There are going to be some issues where, it would be very hard to say whether we can handle them correctly or not, even if the voters were extremely knowledgeable. There is a wide range of other issues where the fact that voters don't even know basic things about these areas of policy means that we're not just leaving quarters on the sidewalk, but often $20 bills or $100 bills that we could pick up but we don't because the voters don't realize that the opportunity is there.

Voting with Your Feet

BZ: When you finish your work and lean back in your chair, do you end up being pessimistic about America's ability to make the right political decisions?

IS: One of my friends, an economist who studies these issues, likes to say that before he started looking at data on political ignorance he used to ask himself why government policy isn't better than it is. After we started studying, he now asks why it isn't even worse. In the short to medium term, studying political ignorance made me more pessimistic because it suggested, on a large number of policy issues, where there are good ways to significantly improve things – where even most experts agree – we still won't do them because much of the public is so ignorant!

On the other hand, studying political ignorance does show a relatively easy way to improve things if enough informed people (and even those that are basically ignorant) understand that we should make fewer decisions through large, centralized government, and more decisions by voting with our feet – either in the market, or when we choose to live in a different state or locality.

The key point is this: If you are like most people, you probably spend much more time figuring out which car or TV to buy than who to support for President of the United States. Is that because the car or the TV is more important than the presidency, or because it is more complicated? It is probably not more complicated, and I think that most people would agree that the presidency is more important. People spend more time and effort on the car or the TV because they know their decision will make a difference.

Similarly, when you decide whether you're going to live in California versus, say, Nevada, or in San Francisco versus San Jose, you put in much more time and effort than you do in deciding who to vote for. If we can decentralize government so that people can vote with their feet more often between jurisdictions, and if we can limit the scope and complexity of government more generally, more of our decisions will be made with better information. I believe people process that information on average in a more unbiased way. The particular point is that there's a social norm that says you shouldn't argue with people about politics.

People often get annoyed if you're like the media, or if you are the kind of person who starts political arguments. They get particularly annoyed if you point out some error in their analysis. Even if you're completely right and their argument is stupid, they'll still be very angry. On the other hand, people are much more attentive if you point out that they are missing out on a bargain – a car, or a TV. Why the difference? It's because people get annoyed about being criticized on subjects where realistically, even if they had a better view, it probably wouldn't make much of a difference. They just have the cost of having their opinion questioned without getting much benefit from it.

On the other hand, on subjects where knowing the truth will actually help people make better decisions that make a difference, they are much more open to new information – not completely open, as they do make mistakes, but on average they do a better job.

BZ: The subtitle of your book, "Why Smaller Government is Smarter," is really the takeaway. To me, this is a political approach that would both automatically produce more informed voters (because of the things they are voting on), and accomplish many other public goods. Indeed, it would be "back to the future"; it would give us back the country that the founders first gave us – a federalist, two-tiered government with states on the one hand, and Federal Government on the other.

One of the solutions is to reduce the power of the Federal Government to affect our lives, and to move that power back to the states, from the states to the counties, and from the counties to the towns and villages and cities. Then the voters will be able to vote more intelligently. In the small town that I live in, north of San Francisco, every issue that comes up is modest in size, and I can vote with incredible clarity and confidence that I know what I am doing. I understand it because it is local. To the extent that you can devolve this power back to a smaller and more local government, the quality of the decision-making by the voters increases profoundly.

IS: Voters do a much better job of voting in local elections than in national elections. When an issue is controlled by local or state government, voting at the ballot box is not our only option. We also have the option of voting with our feet. If you don't like the government policies in San Francisco, you can move to lots of other communities in the Bay Area. If you don't like the policies of California, it's a bit tougher to move out, but huge numbers of Californians have in fact moved to places like Nevada and New Mexico over the last few years.

BZ: And Texas.

IS: When we vote with our feet, we have a much better incentive to be informed than when we vote at the ballot box, because our decision on where to live actually makes a huge difference. The same thing is true when we devolve government power not just to state or local governments, but to private individuals who are deciding things in the market or in civil society.

Finally, you noted that modern government is enormous and complex. Today, government on all levels spends nearly 40 percent of our Gross Domestic Product, so even if the voters followed politics more closely, they still wouldn't be able to have even a minimal understanding of many of the issues that current government actually addresses. Given that voters are only going to devote a relatively small amount of time to studying politics and government, if government was responsible for fewer issues, then we'd have a better chance of understanding how those issues work.

By reducing and decentralizing government, we enable people to make smarter decisions – by voting with their feet, but also on those issues decided at the ballot box. I'm not saying this proves that we should decentralize all functions of government and be complete libertarians. There are other issues we have to consider besides voter ignorance in answering those questions. But ignorance is a big part, and it's too often ignored in debates over the role of government in society today.

Why Education Fails

BZ: Hearing you speak, an issue jumped to my mind that is in the news all the time – the debate about the federal government's control over school curriculum called "Common Core." There was a time when curriculum was determined at the school district level. That's being more or less federalized, so it's hard for voters to affect the curriculum in their local school district. Through the incentives of money, the Feds force their will upon localities. If this is locally decided, a parent can go to a local school board to participate in selecting curriculum and textbooks. But once it's national, there's no way a voter can express their will. There's an example where voting with your feet cannot work.

IS: It is much harder to vote with your feet against a national policy than against the state or local one. The issue of education is also important here because many people – including perhaps some of your listeners – might ask why we don't just solve the problem of political ignorance through education. Why don't we just mandate that people learn more about politics in high school and the like? That's a reasonable question, but the problem is this: First, education levels have risen enormously over last 50 or 60 years, yet we have seen little or no increase in political knowledge during that time. Just giving people more education doesn't seem to increase their knowledge. Secondly, when governments run schools, it is often not in their interest to actually increase people's levels of political information. Rather, governments often instead prefer to use the public schools either to indoctrinate people in their own preferred views, or those of interest groups of various kinds that have an influence over government education policy – both conservative and liberal groups.

In theory, you can imagine a situation where a government really does make a strong effort to use public education to increase people's political knowledge, but in practice it doesn't work out that way most of the time; in part, this is precisely because the public is ignorant and therefore is not in a good position to monitor education policies, such as making sure that they really are increasing political knowledge, as opposed to indoctrinating or engaging in other activities that waste students' time rather than increase learning. It's amazing that since the 1940s and 1950s, we have had a massive increase in average education levels, but very little increase in political knowledge levels. This strongly suggests that investing more money in education and raising the overall level of education, while it may have other good effects, doesn't seem to increase political knowledge very much.

BZ: Is there a case to be made – and I don't intend this to be inflammatory – for some kind of a minimal knowledge test? I don't want to open up that unpleasant hornet's nest of Jim Crow, but I mean a well-done and sincerely drafted test as a condition of voting. Or is that just too much off the rails?

IS: There is an argument for that, and I discuss it in the book. You could certainly argue that as we take a test to be able to drive – since bad driving poses a threat to other people – so similarly, bad voting poses a threat to other people. But you asked if we can have an honest and sincerely drafted test. I'm not convinced the government could be trusted to be honest, sincere, and unbiased in drafting a test. Whoever was in power at that time would have a very strong incentive to skew the test in favor of their party's supporters and against the other parties. That's setting aside questions of racial bias, or other kinds of bias. History strongly suggest that it wouldn't be unbiased.

However, I'm planning to write an article around the idea of letting children vote if they could pass a test of political knowledge. Currently, we exclude children because we think they're ignorant – and most of them probably are. But if there's a minority who are more knowledgeable than the average adult voter, then we could improve the overall quality of the electorate by letting them vote, without taking away the vote from anybody who currently has it.

BZ: You didn't suggest it, Ilya, but how about a system where you and I are the only two voters? That might work.

IS: We might have a one-to-one deadlock on some issues. Notice that in the private sector, you are in fact the only voter. If your goal is to get greater control over things in your life, then there is a way you can be the only voter, so long as you're also willing to let other people have that privilege for themselves.

BZ: Ilya, thank you so much for giving us an hour of your time.

# 4 – PROPERTY RIGHTS FOR THE POLITICALLY POWERFUL

## Guest: William Maurer

Interview Date: March 25, 2012

All the world over, so easy to see / People everywhere just wanna be free / Listen, please listen, that's the way it should be / There's peace in the valley, people got to be free.

– The Rascals, People Got to Be Free

Bob Zadek: People everywhere just want to be free.

Have we got a show for you today! A little Donald Trump, a little Fifth Amendment, property rights, federalism – we've got it all today. We are going to explore the explosive and divisive issues of eminent domain – the right of government to take your property for the simple reason that government wants it. This topic has been in the news since the Supreme Court handed down the infamous Kelo decision in 2005.

If you own real property in the United States, you are at risk. If your elected officials decide that your property is better in the hands of somebody else, they have the power to take it. "Not in America!" you say?

Yes. In America.

What are the rules? What are the abuses? What can be done about it?

To help me sort out this crucial issue of a citizen's right to own and keep property, I'm delighted to welcome Bill Maurer to the show. Bill is with my favorite non-profit public interest law firm, the Institute for Justice. The IJ defends citizens when the government seeks to deny their right to earn a living and own property. Bill, thanks so much for joining me.

William Maurer: Great to be here. Thanks for having me.

Mrs. Kelo's Little Pink House

BZ: Now Bill, the issue of eminent domain has been around since the Bill of Rights. The Fifth Amendment cautions government that they cannot take private property for public use without "just compensation." Government must keep its hands off a citizen's property, unless it satisfies two conditions: 1) It must be for public use, and 2) it must pay the owner. Now, for most of the history of our country, "public use" has meant that if the government wants to build a road or a school and you have the misfortune of having your house in its path, the government has the power to take your property.

This system for balancing the needs of the public with the respect for private property worked reasonably well until 2005, when the City of New London, Connecticut, decided that an area of the city was "blighted." It was down in the tooth, and a developer popped up who said, "I can build some condos and some fancy residential housing. Just get me the land and I'll build this. It will improve your tax base. It will make everybody rich and happy."

So, the City of New London set out to use their power of eminent domain to take people's houses in this area for the sole purpose of giving it to a developer to build more expensive housing. This was not what the Fifth Amendment has in mind. Taking a house from one person to give it to a developer so he or she can make buckets of money and build more expensive housing is not "public use." It is private use.

Well, Mrs. Kelo wasn't very happy about losing her little pink house, and she resisted. The case went all the way up to the U.S. Supreme Court, which, in an astonishing 5-4 decision, found that the City of New London had the power to condemn 10 residences in order to transfer them to a developer for building. Sandra Day O'Connor had a strong dissent, which has been often quoted since then, but the Kelo decision basically said, "Localities know best. We defer to the locality. If you want to take some property because you've decided it's good for your area, that's fine with us."

The Kelo case caused an outrage. Everybody – Left and Right, Democrats and Republicans – was outraged at this land grab, and many state legislatures drafted statutes to prevent this from happening. However, the legislation is not very effective and most citizens are still quite exposed to the loss of their property by government. The Kelo case was litigated by the Institute for Justice. Isn't that right, Bill?

WM: That's exactly right. We represented Susette Kelo. My colleagues Dana Berliner and Scott Bullock both argued the case at various stages. Scott argued the case before the U.S. Supreme Court.

BZ: Did I overstate the issue? Do local governments have the power to take private property for the sole purpose of giving it to another private person? That is, not to build a road but to just take my property by eminent domain to give to you because you have a plan to build a shopping center?

WM: You didn't overstate it, at least that's pretty close to what the Supreme Court decided in Kelo. The City of New London's argument about why they were engaging in a public use, or, as they phrased it, a "public purpose," was that although this property was going to be given to a private entity, that private entity was going to pay more taxes, and, therefore the public was going to benefit. So, it should be considered "public use," since it fits within the Fifth Amendment's definition. However, as Sandra Day O'Connor pointed out in dissent, if that is the standard, then there's not a single case of property in the United States that saves someone from that kind of eminent domain abuse, because anybody's home, small business, or church is going to pay less property taxes than a Costco or a big hotel or a million-dollar mansion.

And that is pretty much exactly what the U.S. Supreme Court said. They made some noises in the decision that you cannot just take from X to give to Y, but if you can take from X to give to Y, and Y will pay more property taxes, then that's okay.

BZ: Basically, this is about papering the file. If the local agency seeking to take your property can make any kind of a showing that there's a common benefit, then that will survive the "Kelo test." Astonishingly, the Supreme Court embraced this taking of property for public use, which implied a total disregard for the sanctity of private property.

It seems to me that you guys almost never lose, and you are doing what in my opinion is God's work. Thank you so much for the work you do at the Institute for Justice.

WM: Thank you. We've been to the U.S. Supreme Court five times, and we've won four out of those five times. For our organization, which has only been around for 20 years, this is a pretty remarkable feat. The one time we lost was the Kelo decision.

BZ: In a way, you won by losing, because the public became so outraged that you were able to cause legislative changes around the country that probably wouldn't have happened otherwise; so, you lost a battle but you are on the way to winning the war. I should point out that without organizations like the Institute for Justice, these issues would not even be fought.

Governments or developers identify an area they believe is ripe for development and that they consider "under-developed" in order to exploit it for their own economic gain. The developer will "persuade" a local authority with eminent domain powers to get him the land and promises the city a magnificent shopping center, or in the case of Brooklyn's Atlantic Yards, a sports stadium, or office buildings, or anything pretty darn glitzy. They say, "We just have to get rid of the pesky low-income people who live there." So, the government will take the property using the power of eminent domain and deliver it to the builder who may or may not follow through on his promises. But one thing is for certain: The people who called that place home will be gone. The neighborhood will be gone. That's a certainty. That's the evil of eminent domain.

The Institute for Justice v. Donald Trump

BZ: In preparing for the show I came across the Institute for Justice v. Donald Trump.

WM: Yes. One of our very first cases.

BZ: This was one of those wonderful victories for IJ. As I recall the story, Donald Trump – the uber developer of all times – had a casino, and he needed some land for the limousine parking lot. Now, how is that for getting the public's appeal? The trouble was that there was a widow living in a house that she had lived in all her life, right smack where he wanted the parking lot to be. So, Donald Trump went to the city of Atlantic City and said, "Take that woman's house by eminent domain. Get rid of her. I want to build my parking lot."

Vera Coking was an immigrant, spoke with an accent, didn't have much money, and was in danger of having her property taken by eminent domain, and along comes the Institute for Justice, which successfully defeated Donald Trump in his attempt to take this elderly woman's home. I have a wonderful soundbite from Dana Berliner after she beat Donald Trump:

Dana Berliner: "Across the country, land-hungry developers have teamed up with tax-hungry politicians to bulldoze people's homes and businesses on the mere possibility that the new, wealthier businesses will generate more jobs or more taxes. It is time to end this kind of abuse."

BZ: It is time to end this kind of abuse.

WM: It is a rather glaring and almost perfect example of what's wrong with this kind of thinking.

Can you think of anything more contrary to the American ideal than the government coming to somebody and telling them, "Hey, we don't think you're good enough to live here. We don't think you're rich enough. We don't think your house is nice enough. We don't think you're bringing in the right kind of people, so we're going to get rid of you. We're going to take your property by force and give it to our allies so that they can pay more property taxes"? It's completely inconsistent with the American ideal that people should be treated by their government with respect and dignity, and represented in their best interest.

The story of Donald Trump and Vera Coking demonstrated that. Donald Trump is rich, influential, and famous, and Vera Coking was none of those things, but because you had courts, lawyers, judges, and a Constitution that they are willing to abide by, a poor widow in an old house was able to stand up to Donald Trump and win.

BZ: The Constitution limits the power to take your property for public use. However, local governments have sought to expand "public use" to a far broader term called "public purpose." However, by this they mean "more tax dollars." In the words of Sandra Day O'Connor, this means any purpose whatsoever.

As they say, politics makes strange bedfellows. This issue is interesting because it transcends traditional party lines. For example, in most eminent domain abuse fights we find that property rights advocates such as the Institute for Justice are allied with the NAACP and many other organizations who stand up for the rights of minorities and lower-income people. So, as they say, it'll make the NAACP into the handmaiden of the Libertarian Party – if only for this one issue.

It's an issue of the powerful against the less powerful, and more specifically, the political elite against people with far less power. It also creates a conflict between the legislative and the judicial branches, which was built into our system of government. The executive sort of sits this one out and we rely upon the courts to prevent the overreaching of the legislative branch of government.

Bill, do the courts do an especially good or bad job in serving as the check and balance against the legislature?

WM: In this issue, especially at the federal level, they have not served as a good check, and have not served the U.S. Constitution and its demands. Basically, they've deferred to the judgment of the legislature, but the judgment of the legislature is always going to be whatever the legislature wants. The vast majority of legislators are not going to sit there and ask, "Does this comport with the Fifth Amendment?"

They're going to think, "Wow, if we take this neighborhood we'll be able to get more property taxes and we'll be a richer city. Instead of being the mayor of a dumpy town I'll be the mayor of a big, rich, important town and that will be helpful for my career!"

So, when the courts defer to the wisdom of the legislature, they're not doing their jobs. They're not being judges. They're simply abdicating their responsibility to implement the U.S. Constitution, and if you don't have judges that are willing to enforce the Constitution, then all the protections of the Bill of Rights are just words on paper.

BZ: That is quite interesting, because the traditional libertarian does not want an active judiciary. They want a judiciary that, in the words of Chief Justice Roberts, is "modest and just," and is the "scorekeeper" – who keeps track of balls and strikes. It is strange because as a libertarian, I want judges to be more activist and to not defer to the legislature, but to say, "Stop!" But for libertarians, the core issue is easy – property rights are sacrosanct and you have to respect the property rights of the individuals, even if it means that the majority is deprived of tax revenue. It's a strange issue because libertarians have to balance competing desires, but here it seems to me to be quite clear that property rights have to prevail. To paraphrase John Adams, "If you have no strong property rights, you have no society."

Anatomy of an Eminent Domain Heist

WM: This issue of eminent domain became the subject of an Academy Award-nominated movie called The Battle for Brooklyn, which portrayed one of the really bad guys in property development named Bruce Ratner. Ratner was the Czar under President Obama in bailing out the auto-companies. He was a very politically connected developer, and was buddies with Mayor Bloomberg. He is also part owner of the New Jersey Nets.

Anyway, Ratner lusted for a big piece of property in Brooklyn called the Atlantic Yards, where a lot of nice, regular folks lived, and he put together a development proposal to build a new stadium for his Nets, along with 16 high-rise offices and residential buildings and some improved transit facilities. This was a really big deal to the local pols in Brooklyn and in New York City. The trouble is that he didn't have all the land. He persuaded New York to condemn the land that he needed by eminent domain, kicking people out of their homes and businesses in order to build these magnificent – at least on paper – constructions.

There was a five-year battle; these neighbors coalesced and took on Bruce Ratner and lost. Bruce Ratner won and promptly changed his plans because of economic reasons, so he only built the stadium for his Nets with the rest to follow. So, there will be a whole lot of mowed-down houses and businesses with nothing to show for it except the stadium. In the movie, one of the residents looked back on the experience of taking on Bruce Ratner, Mayor Bloomberg, and the rest of the New York City administration and he offers a cautionary warning to those who would plow down other communities:

Brooklyn Resident: "You can't build a community. You can build a series of buildings, but it takes a long time for a community to form, and community has roots, and when you pull up a community by its roots, that community goes into root shock. The results of that are all kinds of negative consequences for America. I mean the whole history of urban renewal is a nightmare and yet liberal people still tend to think that's a good idea because we're building housing, but you can't look at benefits without looking at the consequences."

BZ: You can't look at benefits without looking at the consequences. Many times, these plans don't succeed. There was an entire Polish neighborhood in Detroit that was destroyed for a GM factory that never got built. Bill, what happens to these neighborhoods?

WM: Many of these plans don't succeed, and the reason is that when you think about good business and real estate investments and savvy approaches to making money, municipal officials are probably the last people I would put in charge of making those kinds of decisions. They often get stars in their eyes and suffer from a sort of monomania, and they end up building projects that nobody wants, that are not popular, and that don't end up producing anything like the benefits that they were promised when they used eminent domain to seize already-existing homes and businesses.

California Dreamin'

BZ: In California, much of this eminent domain abuse was handled through a series of organizations called "redevelopment agencies" that were answerable to no one and had profound power. Bill, tell us the story of the California redevelopment agencies, the power they had, and what has happened to them in California.

WM: Sure. You mentioned earlier the concept of "blight." Basically, the idea of blight was a post-war conception where urban planners viewed poor people as a disease. They viewed the fact that they were poor neighborhoods as an opportunity to excise those sections, repair them, and bring back a healthy neighborhood.

California first passed an anti-blight law in 1945, and it actually produced something that was almost unique across the country, by creating these redevelopment agencies, which were largely unanswerable to anybody. They weren't elected, and they could issue bonds without having the vote of the people. They couldn't be recalled or voted out of office, so these organizations turned the idea of condemning property to get rid of slums or ghettos into a money-making scheme for redevelopment officials and their allies. They did this via a provision in California Law called "tax increment financing," which allowed them to issue debt and use the increase in property taxes to repay the debt that they had issued. This meant that there was no incentive whatsoever to use this power to clean up slums or ghettos because that wouldn't produce enough money to pay back the debt. So, California created a perverse incentive for municipal officials to condemn growing areas, transfer them to even more politically connected developers, and reap an influx of property tax revenue. It got so bad in the State of California that by the end of 2011 there were 425 redevelopment agencies in the state.

They had "blighted" hundreds of thousands of acres of California property, including things like million-dollar mansions, gated communities, tennis courts, and golf courses. It got to the point where, because of the tax increment financing, 12 percent of the property taxes in the 15th largest economy on earth were going to these redevelopment agencies.

BZ: It's important that we emphasize that they were answerable to no one, so it's not like paying taxes to your city, where you get to vote for city council. Here, the taxes are paid to some fiefdom that you have no control over.

WM: That's right, and they were using this money to condemn perfectly fine white-collar and blue-collar neighborhoods. Oftentimes they would target minorities and the elderly and transfer these properties to things like sport stadiums and auto-mall developers to earn a lot of tax revenue through tax increment financing.

They had gotten close to $30 billion in debt in 2011. This was a secret government acting in the name of Californians and using money from schools and community colleges – things people actually used – in order to condemn private property to corporate developers. They didn't just stop with transferring the property. They would give developers gifts of money in order to lure them into these areas to build. It was a scheme that cost the California taxpayer an enormous amount of money. It was costing school districts in California an enormous amount of money as well, but the redevelopment agencies were very politically connected, so there was little people could do except sue them on a piecemeal basis. Even then you needed to have the resources to be able to fight back.

BZ: Now, these low income or minority areas weren't really blighted, but the courts were complicit and they were found to be blighted. These people who had lower income and no political connections were chased out. They still had to find a place to live. We didn't cure poverty, we just buried it and scattered it about so we couldn't see it.

Jerry Brown: An Unlikely Hero

BZ: You will be surprised when you hear who the libertarian hero was who stuck a dagger into the heart of California's all-powerful redevelopment agencies. Who was that hero?

WM: Governor Jerry Brown.

BZ: Governor Jerry Brown. Yes siree, Bob. Jerry Brown slayed the redevelopment agencies. He did away with them.

WM: Remember, under tax increment financing, redevelopment agencies could claim the increases in property taxes after declaring an area blighted, and this "increment" would go to them. At the time that the redevelopment area was declared, whatever property taxes were being paid would go to the school districts. So who was losing out in this equation?

BZ: The cities.

WM: Yes, and the school districts.

BZ: The property tax recipients.

WM: Yes – counties, community colleges, and local municipal hospitals. It was the old Margaret Thatcher line: "The thing about socialism is that eventually you run out of other people's money." The redevelopment agencies ran out of the school districts' money to spend, and the school districts kept seeing their property and their property taxes getting smaller and smaller.

BZ: And the redevelopment agencies kept taking bigger and bigger slices. With the system meltdown occurring in California at the time, the school districts were thinking, "Why are all these property taxes going to redevelopment agencies, while we're having to lay people off or having to close schools? We can't pay for repairs."

So, Jerry Brown, to his great credit, recognized exactly what a scam this thing was and how it was sucking money away from school districts and taxpayers, and he recognized that they were very abusive with regard to property rights, so he decided that he was going to get rid of them. It took an enormous amount of political courage but he said, "This is how it's going to be," and the legislature had no choice but to follow his lead.

WM: That's exactly right. The redevelopment agencies kind of slit their own throat, because the legislature passed (and the Governor signed) two different bills. One would have gotten rid of redevelopment agencies altogether, and another gave them an "out," which meant that they could continue to exist if they started paying money to school districts. The redevelopment agencies didn't want to stop existing or pay any money to school districts either, so they sued over both laws. The California Supreme Court, to its great credit, upheld the first law, which stated that the legislature created these redevelopment agencies and could get rid of them if they wanted.

Then they struck down the second bill – the one that allowed them to buy their way out of oblivion – because it violated a provision of the California Constitution, where the redevelopment agencies had made it illegal for anybody to require them to give their money to anybody but redevelopment agencies.

BZ: Jerry Brown has become the hero of the libertarian Right.

Bill, we have a caller with a little on-the-ground experience with redevelopment agencies. Kathy, welcome to the show. What's on your mind this morning?

Kathy: Well, we live in an old town called Los Gatos in California, and our local redevelopment agencies decided to spend $3 million on a piece of property without the town people knowing. Then they decided they were going to build 32 condo units in that area. This is an area that's next to a favorite walking trail, and nobody knew anything about this until the deal was already done and they had already hired a redevelopment agency to build those condos without any notification to us. The group in our area here kept going down to every one of the town meetings and beating them back on this whole thing, but it was Governor Brown's "No" to redevelopment agencies that actually stopped the whole process.

BZ: You would have been powerless if the redevelopment agencies hadn't been done away with by Jerry Brown?

Kathy: I would say so.

BZ: There you have an on-the-ground experience of how these redevelopment agencies accumulate power and are totally insulated from the political process. And neighborhoods pay taxes in effect to these agencies, but have no say in what the agencies do.

The moral of the story is, "Don't put power in unanswerable agencies." Keep the power with the voters. Kathy, thank you so much for sharing your experience.

Kathy: You're more than welcome.

BZ: Bill, we have a couple of minutes left, and as a small government guy, I generally don't look to Washington to fix my problems, but tell us about H.R. 1433 – the Private Property Rights Protection Act.

WM: That is a proposal at the federal level that would tie up the ability of local governments to use federal money in projects if they engage in this kind of eminent domain abuse. It's gotten a good reception. Ironically, one of the people who has been a real stalwart on federal issues involving eminent domain abuse has been Maxine Waters. Speaking of heroes of the libertarian Right!

BZ: Can you believe it? I'm going to be supporting Maxine Waters!

WM: Yes, she and Jerry Brown are two of the real heroes of property rights in California. It's somewhat ironic, I think.

BZ: I hate the fact that the federal government uses the power of their grants to be coercive. That's how we have a national 55-mile-per-hour speed limit. The federal government threatened to withhold highway funds if the state enacted the rule that Jimmy Carter liked. They cannot compel but they can coerce states and localities to do their bidding, and that's exactly what's happening here. The federal government is saying, "You can do what you want but we're not going to give you any economic development money unless you limit eminent domain abuse." So once again I'm torn between my respect for federalism and increasing state power as much as possible while being a cheerleader for H.R. 1433 because it accomplishes the ends that I want.

WM: Well, I would say that there's actually a distinction between this and the 55-mile-an-hour law, because here the federal government, or Congress, is stepping into the role that the federal courts should have taken.

BZ: I agree. I want to thank you and the Institute for Justice once again for the great work that you do, and thank you so much for being on the show with me and sharing your wisdom with my audience.

# 5 – THE SECOND AMERICAN REVOLUTION NOW!

## Guest: Don Boudreaux

Interview Date: July 31, 2011

You say you want a revolution  
Well, you know –  
We all want to change the world   
– The Beatles, Revolution

Bob Zadek: You say you want a revolution? That's what's going on in America right now.

There's a battle over the deficit, a battle over the budget, a battle over the debt ceiling, and a battle over jobs. These important economic issues are a placeholder – a surrogate – for the real battle over the direction of our country. This battle has come to the fore because of the necessity of raising the debt ceiling. I should put "necessity" in quotes. Should we be raising the debt ceiling? Will there be a default if we don't? What is at stake and what is going on in the body politic of America? To help me sort all this out, I am oh, so delighted to welcome Don Boudreaux.

Don Boudreaux is a professor of economics at George Mason University. Don is my very, very favorite blogger. His blog, Café Hayek, is a must read. I urge you to subscribe. Don, welcome to the show.

Don Boudreaux: Good to be here.

A Tale of Two Debtors

BZ: Don, the battle is allegedly over default. Should we increase the debt ceiling? You have written that not raising the debt ceiling has almost nothing to do with causing a default in the payment of the debt. I couldn't agree more. What's going on with the debt ceiling and default?

DB: Let's start with the word "default" as it's used in the context of debtors paying off creditors. It means either the inability or refusal of people who owe money to creditors to pay those creditors. This discussion is now being presented as, "If the debt ceiling is not raised by August 2, 2011, Uncle Sam will somehow be forced to not pay his creditors."

That's just untrue. If you look at Uncle Sam's cash flow, which it gets mostly through taxes withheld and a few other sources, Uncle Sam has more than enough money to pay off his creditors, the interest on the debt he had in the past, payments to workers who have already worked, payments to suppliers of the military, and so on.

Now, he doesn't have enough money to pay off all his creditors and pay off all of the other things that he has promised to pay. To do that, Uncle Sam must borrow more money. Now he's up against the debt limit that he himself has imposed through the Congress. It's wrong to say that if the debt ceiling isn't raised that Uncle Sam must default. That's not true. However, Uncle Sam must tighten his belt. He'll have to point to many recipients of government largess and say, "Look, we can no longer borrow money to give you what you expect to get from us. We won't be able to subsidize your phones. We will no longer be able to give you your welfare payments. We will no longer be able to give you these other goodies that you've gotten in the past."

But, will Uncle Sam be able to pay off his creditors? Absolutely. There is more than enough cash flow to do that.

BZ: I've been representing business creditors for about 45 years as an attorney and as a business guy. My clients and I lend money to businesses. It's an everyday occurrence for a business to wake up one morning or have advanced notice and determine, "Oops, I have a cash flow problem."

What does a business do if it is well managed? Well, the first thing it does – and Don, this is the key word – it prioritizes; the government hates doing this, because it means something goes to the bottom of the list. A business will say, "Okay, I have a little bit less money than I should have to do everything I want to do."

The first thing you do as a business person is you call your banker, and your major creditors. You say, "Look, I've got a cash flow problem, but don't worry. I will take care of you. Banker, I want you to support me because I'm looking out for you, and I will make sure that you get paid. I'm going to be dealing with other creditors, and I want you to be on my side."

The banker will say, "We're in," because the business is doing the right thing. It's coming to grips with the fact that it doesn't have unlimited money. Once you get your important creditors on board – in the government's case it is bond holders – and assure them they will get paid, then they become your ally, not your adversary.

Obama, by making this all into a political theater, is turning the bond holders into adversaries instead of into allies. As Don says, there's no reason why they are not going to get paid unless we make a conscious decision not to pay them and a conscious decision not to pay the military. Obama and the Treasury Department have been totally silent on how they are going to prioritize the payment of funds that are required to go out.

DB: You make a good point, Bob. Only when government is the subject of the discussion do we get this bizarrely backwards worldview that says, "Boy, if you don't let this institution that's in huge debt borrow even more ... if you don't allow it to break its promise to keep its debt under a certain limit ... if you don't allow it to break that promise, then things are going to be even worse."

If the government would manage to not raise the debt ceiling and then prioritize its payments to pay off all its creditors, nothing would be more welcomed by the credit markets. They'd say, "Look, Uncle Sam is serious about keeping his fiscal house in order."

Allowing Uncle Sam to borrow even more money – in violation of a previous commitment to not borrow more than what the current debt ceiling allows – has been transformed by the political class, and the gullible mainstream media, into an indication that Uncle Sam is acting responsibly by raising his debt ceiling. It's ridiculous.

BZ: To go back to my business analogy, a businessperson who calls their banker and says, "I have some cash flow problems. I'm on top of it. I will pay you. I will keep you current. I will not be in default to you. I'm cutting back on country club dues, and I'm cutting back on marketing expenses that I think are superfluous. I'm closing up unprofitable divisions." The bank will say, "This guy's on top of his game. We're on board." Compare that to a business person who calls their banker and says, "Okay, banker, I have a problem. I'm clueless about whether I'm going to be able to pay my bills. I'm not cutting back. By the way, I need more money." That banker will hang up the phone and call me and say, "Close the son of a gun up because he's irresponsible."

DB: As he should. Why does the mainstream media just go along with this notion that allowing Uncle Sam to violate his commitment to keep his debt under control is the prudent fiscal thing to do? It's just the opposite. Sticking to that commitment would send the signal to the credit market that Uncle Sam is serious. It's infuriating to me how backwards and irresponsible the entire discussion of this debt issue has become.

BZ: If we do not raise the debt ceiling, as Don pointed out, there will not be a default. There will be a strategic, politically motivated non-payment – strategic, intentional non-payment, but not a default. Politics cannot overrule sound fiscal policy.

Taxes, Not "Revenue"

BZ: Don, you and I have to take a pact in front of our audience. We have to agree that we will not use the word "revenue" when we are talking about taxes. Revenue suggests something that is earned, not taken. We will use the word taxes when we mean taxes. We will not use the word "investment" when we are talking about government spending. It's not an investment. It's an expenditure. When listening to the talk shows on Sunday, Obama has to admit that he must reduce benefits for entitlements. His talking points are that we are going to strengthen Medicare, Social Security, and Medicaid. But they are not strengthening it. They are reducing the benefits. We're going to speak true-speak, not political-speak. Do we agree, Don?

DB: Absolutely. It's a rare commodity.

BZ: Obama was fighting desperately to have any decision on raising the debt ceiling moved past the 2012 election. Obama doesn't want to talk about this again. Obama's position on extending the debt ceiling discussion beyond the 2012 election is as follows. Here is the clip:

Obama: Republicans in the House of Representatives just spent precious days trying to pass a plan that a majority of Republicans and Democrats in the Senate had already said they wouldn't vote for. It's a plan that wouldn't solve our fiscal problems but would force us to relive this crisis in just a few short months. It would hold our economy captive to Washington politics once again.

BZ: Obama says, "No, no, let's not have this discussion again."

I say we should discuss it every darn week between now and forever until we get it right. If Obama's worldview prevailed, I think he would say, "Let's not re-elect a president every four years. It's a messy, ugly debate. Let's just have a president for life and put that issue behind us."

DB: I agree.

BZ: Why does Obama fear a full-throated public discussion on something as important as this? I say extend it for a week at a time. Talk about nothing else other than this until we get it right. Increasing the debt ceiling is a phony issue. If we didn't increase the debt ceiling, all it means is that some programs which are appropriated don't have the money spent. This means that we reduce spending in the most direct way, which is everybody's goal. Isn't that what would happen?

DB: Yes – it's not default. It's called belt tightening. Uncle Sam does not have to borrow more in order to become more fiscally prudent. As you pointed out, in the private sector, if you're having fiscal problems, you don't go into greater debt. You reduce your spending. The same is true for the government. The government is not some magical thing unattached to reality. If it's spending too much and borrowing too much, the only way to restore its fiscal credibility is to spend less and hence to borrow less. That is what refusal to raise the debt ceiling would bring about. It's a good thing.

Let me add that I think it's the height of hypocrisy for Barack Obama to complain about the U.S. economy being held hostage to Washington politics. These people are about nothing other than having the economy held hostage to Washington politics.

Milton Friedman's Legacy: On Spending Other People's Money

BZ: You know Don, there's an interesting byproduct of all this, which you have pointed out in some blogs, which is that the threat of a default forces everybody to realize how much money they get from the federal government. One can say, "Doesn't this bring home to everybody how dependent we have all come to be on checks from the federal government and on federal government largess? Doesn't that make us ask ourselves why it has to be this way? Why can't we just live our lives without this sickening dependency on the federal government? They send out 70 or 90 or 100 million checks a month. What dependency!"

DB: I agree. It's appropriate to point out that today is the 99th anniversary of the birth of—

BZ: Milton Friedman.

DB: Yes, the late Milton Friedman. Friedman was one of the top economists of all time, certainly of the 20th century. No one did more than Friedman to point out to the general public and to fellow economists that when you spend other people's money, you never do it prudently. In Washington, we have a group of people spending more and more of other people's money. We should not be surprised that when person A spends person B's money, they do not spend it as wisely as person A would spend person A's money. That's why we have these fiscal problems. It's a shame that Friedman is not alive today, because his wisdom and his eloquence are sorely missing in these kinds of debates. Unfortunately, we try to carry on with what resources we have – like you – that point out the lunacy, hypocrisy, and the double-speak of it all in Washington.

I live in the D.C. suburbs. For the last couple of weeks, I've been hearing these supposedly serious news reports on the radio and the local TV news about how the government will be in default to their employees if it cannot pay all its bills. I'm sorry – unless you already worked and the government owes you money, the government does not owe you a job in the future. Refusal to continue employing you is not a default, but that's how it's presented.

Let's face it. The vast majority of employees in the D.C. area should lose their job, because they're doing work that is at best non-productive. More realistically speaking, it is anti-productive. It's destructive. Insofar as this debate causes people across the country to realize just how much government is involved in our daily lives, it's a good thing. Let's hope that this realization causes at least enough people to put genuine pressure on Uncle Sam to trim back.

I have no delusions that this is going to result in some libertarian laissez-faire utopia, but I do have some hope that for the first time in my life it will cause a genuinely significant push to reduce the role of government in American's lives. Anyone who has his or her eyes open should see that what is going on is the direct result of the irresponsibility of having strangers spend other people's money. It's very bad.

BZ: This morning on "Meet the Press" Tom Brokaw was on David Gregory's panel. Tom Brokaw gave a very impressive list of mistakes in the past that we are now paying for. He rattled off things like the increase in prescription drug benefits, the growth in Medicare, growth in Medicaid, growth in all of these programs. Brokaw's theme was, "Look, both parties are at fault. Neither party got it right," and he was correct but he missed a point. What Brokaw didn't mention, because of his narrow worldview, is that one party always got it right: the Libertarian Party. There is a substantial group of people in this country who have always gotten it right, and only now is the country discovering they got it right. As Democrats and Republicans both admit that they have made profound and serious economic policy errors, one party has made none – not because they were not in power, but because everything they published and everything they have believed in has proven to be exactly right. That is the story yet to be fully told.

DB: It's unfortunate that the libertarian, laissez-faire, or classical liberal message has fallen so out of favor in America over the past century. I think most people lead their private lives by that message. We don't tell our kids to go out and take from their neighbors just because they think their neighbors are wealthier than them. We don't tell our kids to go about envying other people. We don't tell our kids to go about telling other people how to live – what to eat and what not to eat. Yet, somehow when government gets involved we think, "Oh yeah, that's what government should do."

Most Americans would be embarrassed if their children tried to do it and would punish them. If my son tried to do that, I'd whip him, and I don't even believe in corporeal punishment. I'd be appalled. Yet somehow when government does it, we think it's this mystical, magical institution that's different from ordinary individuals. We excuse it, and we let it do things that we would never tolerate in our own selves, in our children, in our friends, and in our neighbors.

BZ: Don, on the analogy between parenting and government – you would never, I suspect, want to build dependency of your children upon you. You want your children to understand they will be in the world without you, and all you can do is give them the tools to survive, but you cannot keep them alive. They have to do it on their own. Yet, government builds this unhealthy dependency by giving out so much money that nobody can exist beyond government. It's that dependency that perpetuates this sick system.

Does the Government Create Jobs?

BZ: Of course, the real economic issue where Obama is perhaps the most vulnerable, is the relationship between government policy and jobs. Jobs, of course, is a big issue. Unemployment remains above 9 percent and there is no indication that it's going down. There's been a lot of pressure on the government to "create jobs" (a concept I find impossible to fathom). In some instances, I suppose the government can "create jobs." The government could "create jobs" by hiring 10,000 men to dig a hole and another 10,000 men to fill in that hole. They will have created 20,000 jobs – if that's the goal in and of itself.

On top of that, we have former Governor Granholm from Michigan saying that the government's primary focus should be on jobs, not on default. To me, government doesn't create jobs. They could, but that would be wasteful. All the government can do is create an environment where businesses can create jobs. Don, what is the relationship between fiscal policy and jobs?

DB: It is a widely believed myth that government spending and monetary policy creates jobs. I don't believe it does. Entrepreneurs create jobs, and the freer they are, the more jobs they create – and, the jobs they create are worth more. The freer the economy is, the higher the wages that workers get paid. Ultimately, what matters is how much you, as a worker, can purchase with what you own. You could have tons of job offers. You could have the opportunity to work for 80 hours a week. If the economy you live in doesn't have anything on the shelves of the supermarkets, and the department stores, and in auto show rooms, and in the medical hospitals, then you're going to be pretty poor. Entrepreneurs create jobs when they are free.

Government can "create jobs" by reducing regulation, but to call that creating jobs is like saying governments have stopped destroying jobs. Then there's the idea of government hiring people to dig holes or hiring people to go off and fight in a war. In a sense, it employs those people, but it's not employing them to produce anything directly that they or other consumers can purchase to make their lives better.

One of the great myths that still pervades our common psyche today is that the New Deal got us out of the Great Depression. The New Deal did not get us out of the Great Depression. Unemployment was still about 15 percent in 1940. It wasn't even World War II that got us out of the Great Depression. Unemployment fell, of course, but that's because we had a whole lot of people conscripted into the military. You had this huge boom in military buildup. We didn't get out of the Great Depression, as far as I can tell, until 1946. And what happened in late 1946? Rather surprisingly, thank goodness, the government rolled back its operations. It deregulated in ways that people were not expecting.

Roosevelt had basically become an open socialist in office his last few years. When he died in 1945, we returned to a freer market economy. It was that greater freedom that inspired investors and business people to get active and creative in starting up new industries and firms, and this led to the post-war boom. It had nothing to do with government spending. It had nothing to do with World War II. It had everything to do with entrepreneurial creativity that was made possible by economic freedom.

BZ: The government and the Democratic administration's ally, the unions, do more to destroy jobs by artificially inflating wages. That's what unions do. The only purpose of trade unions in America today is to force wages above market rates to non-market rates. Any other purpose of unions has gone by the wayside. You have government with the minimum wage – the Davis-Bacon Act – and many Davis-Bacon statutes all artificially increasing wages. Well, imagine what would happen to car sales if the government decreed every car has to be sold for twice the market price. How many cars would be sold? Government would reduce the purchase of cars by artificially increasing the cost. That's what government does with wages.

DB: That's a good analogy, Bob. The handful of people who are helped by labor unions are not the poor, struggling workers that labor unions like to present themselves as championing. They are the already highly skilled, higher-paid workers who will get paid even more because of the labor union restrictions.

BZ: There was a bit of a movement with the Al Sharpton gang, who were complaining that Obama was not doing more for black unemployment. Indeed, Obama could help black unemployment by reducing the minimum wage and by reducing the monopoly that unions have on jobs – so that it's easier to get a job. Employment would go through the roof. Simply lower the price to the market price, and you end up with more jobs – just like with housing. With the housing market, where government is interfering with foreclosures, houses can't reach their true value. Therefore, there's no housing boomlet yet.

Government just can't keep their hands off the free market to let prices – whether it's wages or prices for commodities – reach their true level and let the chips fall as they may. The number of jobs is, to a substantial degree, a function of the free market not being allowed to operate – not of the free market failure. The free market would create so many jobs it would make your head spin, but government stands in the way.

DB: I would add also, that public school monopolies in K–12 education, dominated by teachers' unions, are damaging young people's ability to learn, because they don't educate these young kids. When kids graduate from high school, their skill set is way below what it should be. The future those kids are eligible for doesn't pay what the jobs would pay if the typical high school American graduate was better skilled and better educated.

BZ: Of course, there was no issue that Milton Friedman cared about more than opening up the educational system to the free market. Milton Friedman was the creator, perhaps, of the concept of school vouchers. That's another way of saying free choice in schools. Also, Don, you mentioned World War II and conscription. It must be mentioned that Milton Friedman, more than any other economist, was instrumental in getting rid of the draft in America. It's something which he doesn't get enough credit for.

DB: Yes. Most people say, "Free market people – you're a bunch of conservatives."

Milton Friedman was very adamant – he never called himself a conservative. He denied it, in fact. He said, "I am not a conservative. I am a liberal in the classical sense – in the way that term was first used." Milton Friedman was in favor of drug legalization. Milton Friedman was a tireless and passionate opponent of military conscription. No one would identify those as conservative positions.

BZ: You're right. No single individual in America is more responsible than Milton Friedman for getting rid of the military draft. For that alone, the man deserves a place in heaven. He was just a champion. He was doing that when it was not popular. He was doing it because he understood, not only that the draft is an economically unfortunate institution, but that it is a morally offensive institution. Milton Friedman believed it was slavery, and it is indeed slavery to take someone's life for two, three, four years against their will. Milton Friedman opposed it chiefly on those grounds. To this day, every American owes him a debt of gratitude for that service.

I am delighted to end this segment of the show paying tribute to Milton Friedman, who was born 99 years ago.

DB: 99 years ago, today.

Taking the Crony out of Crony Capitalism

BZ: This morning, Jennifer Granholm, the former two-term governor of Michigan, who presided over one of the largest tax increases in any state's history, was on one of the shows – I think it was Meet the Press. In attempting to deflect blame that she was the cause of Michigan's unemployment problems, she complained that there was a loss of jobs because of what happened with the GM and Chrysler bailouts, and because of the failure of the government to create enough jobs. She suggested that jobs that left Michigan went overseas. Of course, she totally misses the point, probably on purpose, that her jobs were lost to Tennessee, Alabama, and states in the South that had right to work laws. What she meant to say was that they were trying to save union jobs, because all they did was create more union jobs at the expense of non-union jobs. It's amazing what these people get away with on network television.

DB: I have never in my life heard a politician accept blame for anything, except for blaming themselves for being a poor campaigner. They never say, "Oh yeah, I made a mistake. I pursued this policy and it caused the economy to tank," or "I pursued this policy and I realize now that it reduced Americans' freedom rather than enhanced Americans' freedom." They always blame other people. That's why they have so much gall when they point their fingers at businessmen. Now look, I think business people too often get in bed with politicians to seek their own favors. I oppose that. Free market economics and laissez-faire is not pro-business. It's pro-consumer. It's pro-freedom. Politicians are just world champions at avoiding blame. They are champions at pointing fingers at others, and Governor Granholm, of course, she's right up there in that.

If taxes rise in a state, regulations are increased to a burdensome level (as they were under Granholm), and then you complain about the loss of jobs and the loss of economic vitality in your state, you are either just unbelievably dumb, or you're a liar, or perhaps both. This is just an appalling effort to deny responsibility for your own actions. She was a big government, high-tax governor. She got her way in the legislature and in Ann Arbor, and we see the results in Michigan.

Now, as I say, she certainly wasn't the only one. Michigan has had a long history of going down the tubes with bad policies, and she continued it. She was a champion of it. For her to blame other people for Michigan's failures is just irritating beyond words.

BZ: Don, you mentioned the phrase "pro-business." I say pro-business is a deceptive concept, and here's what I mean. Business and free markets are basically unrelated concepts. You take Jeffrey Immelt at General Electric – General Electric is a government agency disguised as a business. It is so dependent on the political process for its profitability and survival that General Electric and others like it would fear the free market. They do not benefit from the free market.

DB: Absolutely. The list of those is long: General Electric, Archer Daniels Midland, Martin Marietta, Boeing even, to some extent. The list is very long of these so-called businesses that suckle at the teat of government. Naturally, the leaders of these firms are pro-government. It's unfortunately misleading to the typical person who says, "Oh, this business executive, even he or she thinks that government should do X, Y or Z."

Well, of course he or she thinks government should do X, Y, or Z because that person is getting most of the benefit. Free markets are about giving consumers maximum freedom to pursue their lives as they see fit. Part of that is to allow entrepreneurs and businesses to respond to those consumer demands. The free market is not at all about protecting businesses from competition. Tariffs, regulations, and in a lot of cases, even high taxes are really just means of protecting powerful businesses from the competition of smaller businesses or other businesses that want to compete for their consumer base.

BZ: There's no better example of that than the sickening display when Obama gets in front of the cameras and announces doubling the CAFE standards – the fuel mileage standards for cars. You have these three automobile CEO puppets nodding and saying, "Yes, we love it. We love it. We love it."

Well, what choice do they have? Government owns a substantial portion of one of them, and is the creditor of another one. They are dependent upon the government, which saved their jobs. They don't dare protest a policy that is bad for the automobile buying public – that is bad for the manufacturers and stifles competition – and there they are nodding like puppets. They might as well be working for the U.S. Department of Commerce. They are just arms of the federal government.

Listeners of my show know this: Whenever we talk about free markets we are not saying "business." No. Free markets means entrepreneurship. It means small business. That's what the free market means. But there has been a sickening and incestuous relationship between tax breaks and loopholes so that most large businesses – G.E. being the ugliest example – are simply instrumentalities of the federal government, like the states are becoming. They are not independent free market enterprises.

DB: The way I would say it is: I want to take the crony out of crony capitalism.

BZ: Right, exactly right.

DB: Except the problem with that is that crony capitalism isn't even capitalism. It's just cronyism. I want to replace cronyism with capitalism. Capitalism is maximum freedom for consumers to spend their money as they see fit. It is maximum freedom for entrepreneurs to compete for those consumer dollars – but with no expectation and no hope of being protected by the government if you fail to compete successfully for those consumer dollars. General Electric is a monument to cronyism.

BZ: And a little-known fact: When General Motors needed to sell this piece of garbage car called the Volt, who do you think bought half of the production of Obama's auto company? It was Jeffrey Immelt at G.E. who bought half of the Volt production. Not only that, but then he gets a tax break from the owner of General Motors – the government – for doing so. The government, which owns General Motors, pays Immelt through G.E. to buy government manufactured cars, and then pays for them with a tax break. You can't get any more incestuous than that.

DB: Didn't G.E. get a lot of government subsidies? If so, it probably used some of the cash that it got from Uncle Sam to buy the Volt, and then got a tax credit on top of it.

BZ: General Electric might as well be the TVA or some Depression-era government entity.

I've been talking with Don Boudreaux for the past hour about deficits and the debt ceiling. Let us hope that, if they do raise the debt ceiling, they do so with hard reductions in government spending. That, and only that, will create jobs. Paul Krugman and his Keynesian approach simply will not and does not work. The government cannot create jobs and will not create jobs. If I'm not being too optimistic, it seems like this week portends a sea change in how Americans see their economic relationship with their government. We can hope so.

DB: Yes, let's hope it does.

BZ: I think this is the finishing up of the American Revolution – of the conference which the founders started in 1787 in a closed-door four-month session in Philadelphia. This is the final chapter. Perhaps we will become more allied with Locke than with Sarkozy. Let us hope so.

# 6 – LET THEM ALL IN

## Guest: Alex Nowrasteh

Interview Date(s): Excerpts from May 5, 2013 & December 4, 2016

I like to be in America / Okay by me in America /  
Everything free in America / (For a small fee in America)  
–West Side Story, America

Bob Zadek: Everybody wants to be an American, don't they? People from around the world would love to come here. Why aren't we delighted to welcome them?

At the founding of our country, we had no immigration policy – unless one would consider "let them all in" to be a policy. Anybody who wanted to come here and was willing to abide by our rules and political philosophy of freedom was welcome. And it worked. We became a country of unparalleled growth and opportunity – truly the shining city on the hill. We were the magnet for the world.

Perhaps immigrants weren't always welcome in the communities they chose to join. Their behavior was seen by some as strange. They did not behave like others and often spoke a different language. But as the country and the legal system welcomed them, the slower-to-react social system began to do so as well. I say "slower" because the social system represents a lot of individuals acting privately, and social systems are not and should not necessarily be the focus of government. As a political system – a country with laws – we welcomed them. Things started to change, however, and we began to develop an immigration policy. The policy was a reflection of bigotry and cowardice, and became more about protecting "our" jobs from "them."

When I speak with my friends about the subject of immigration, it is always phrased as, "How do you feel about illegal immigrants." Of course, everybody is opposed to "illegal immigrants." Try asking the follow-up question, "Well, which part of that are you opposed to? The illegal part or the immigrant part?" If the United States suddenly passed a law that put us back to the 1880s, when there was no such thing as an illegal immigrant, and when all immigrants were per se legal, would those who oppose illegal immigration then be content with the issue?

The answer, invariably, is, "Not quite." So, it seems to be that the opposition to illegal immigration is far more on the immigrant part and far less on the illegal part.

Everybody has a strong opinion about this issue. Who better to discuss it with than my guest, Alex Nowrasteh? Alex represents the group of men and women who work at the Cato Institute suggesting policy alternatives for our country. When I say Alex is with Cato, that is like describing him as a member of Mensa or some other honorary organization. Cato scholars are intelligent, free-thinking, and they know their subject matter cold. Alex was one of my first guests and has been a frequent contributor since then. Alex, welcome to the show.

Alex Nowrasteh: Bob, thank you for those kind words.

BZ: Alex, when we talk about immigration policy, one should have some basic principles that the policy should adhere to. Policy is not designed in the abstract. It seems to me that the principle should be to let anybody into our country who wants to come here, because if somebody wants to be an American, they probably bring the positive values that we all want to have in our fellow residents.

As far as your view is concerned, what should the cornerstones of immigration policy be?

AN: I think the goal should be to adhere to our traditions of respecting the life, liberty, and private property of everybody in the United States and of people who want to come here. The only policies we should have in regard to immigration are to exclude people who are criminals, suspected criminals, terrorists or suspected terrorists, or those with very serious communicable diseases. This principle is consistent with the free market and the foundational principles of this country.

It is an Enlightenment idea that everybody has the right to pursue life, liberty, and property without the coercive interference of government or the coercion of other people. We should change immigration policy to mean that peaceful people who are healthy and who aren't criminals or suspected terrorists, and who want to be able to come to this country, should be able to come here and work, own property, and raise a family. In short, they should be able to engage in all of the other peaceful exchanges that you and I engage in on a daily basis.

BZ: The founders recognized certain rights that humans are born with called "natural rights," and one of them is the freedom to travel and to improve yourself, if in doing so you don't compromise the property or personal rights of another. America's founding principles respected that. So, I ask the audience: What is wrong with honoring that traditional American freedom and telling the world, "You are free to come here if you want to sign onto an American system of values"?

Those who say, "Close the borders," seem to be saying, "Stop! We have exactly the right number of people here now, and if we have one more it's going to ruin something!" But it's not as if we have a magic number now.

A Brief History of Immigration

BZ: Now, Alex, people either don't know, or tend to have forgotten, that for the first 100 years, when we enjoyed profound economic growth in this country, there were virtually no immigration restrictions whatsoever. It was truly the Bob Zadek rule of "let them all in."

Tell us the brief history of immigration regulation in this country, and what drove the policy. Starting with the founders and going through the 1880s, isn't it fair to say that we had truly open borders?

AN: Yes, I think it is fair to say that. When you look at the first immigration law, the Naturalization Act passed by the U.S. Congress in 1790, it was one paragraph long, and it was essentially just an open-borders law that regulated who could become a citizen. There were some nasty rules in there, but it said that there were no restrictions on who could come here, and there was no mention of race or country of origin. Anybody could come here. There were no inspections, and no quotas.

Through the 1850s, '60s, and '70s, a handful of laws were passed that didn't do very much at all to restrict immigration. In fact, in the 1860s, the government went to the other extreme to subsidize immigration. They subsidized the advertising of immigration in Europe to try to get more people to come here. In 1875, Congress passed a law that basically banned criminals, people who were insane, and prostitutes.

In 1882, the government put in place the first ever quotas and limitations based on a nationality in the Chinese Exclusion Act. The intent of that law was to try to exclude Chinese women who were coming over to meet male Chinese immigrants working in the Gold Rush or other industries in California. Then, beginning in the later 1880s, laws were passed against the importation of workers who could break up labor unions. There were a lot of Chinese, especially in the Bay Area at that time, who were coming in and working in cigar manufacturing.

Samuel Gompers, the head of the American Federation of Labor Cigarmakers' Union in that part of the country, (who himself was an immigrant from the United Kingdom) pushed for a ban on Chinese immigrants because he thought that they were competing too much with the white workers in the cigar and cigarette manufacturing companies in the Bay Area. That was basically the first time that immigration restrictions had been put in place on a nationality.

You then had The Gentlemen's Agreement of 1907 between Japan and the United States that would stop Japanese immigration to the United States. In 1917, we had a law that banned illiterate immigrants and almost all immigrants from Africa and the rest of Asia from coming into the country.

Finally, you had a law in 1921, after World War I, called the "Emergency Quota Act," which put numerical restrictions, for the first time, on immigrants from Europe, with the intent and effect of discriminating against Eastern and Southern European immigrants in favor of Northern and Western European immigrants. That law was solidified and made more exclusive by banning many categories of Southern and Eastern European immigrants in 1924.

In 1929, Herbert Hoover signed a law which basically banned almost all immigrants from Europe for the rest of the Great Depression. Then, after World War II, we had a gradual expansion and liberalization of immigration. In 1942, they created a guest-worker visa program to help during the war, which brought Mexican farm workers up north. That was expanded in the early 1950s. The Immigration Act of 1952 removed a lot of the race-based and discriminatory features of the 1924 Act, and we had a pretty big liberalization in 1965. It treated every immigrant from every country essentially the same way. In 1986, there was Reagan's amnesty for three million or so Mexican illegal immigrants who were here in the United States. Then, we had an Immigration Act in 1990 that opened the door much wider for highly skilled immigrants overseas, especially Asians, but since 1990, there has been a shift. We have seen a crackdown on immigration with increased spending on law enforcement at the border and in the interior of the United States, and we haven't seen any further liberalizations or increases in immigration legally.

BZ: As we can see, laws to restrict immigration starting from the end of the 19th century were for the most part driven by xenophobia and racism, not by any findings that our self-interest as a country was furthered by immigration restrictions. Americans who gave lip service to the idea of competition, to meritocracy, and to "let the best man win," were all of a sudden unwilling to compete, because God forbid, somebody would do their job for less money! It was cowardice and economic protectionism that drove our immigration policies. It had nothing to do with the fabric of America. It was shameful.

AN: The most xenophobic period of American immigration law was from 1880 to about 1930, but it wasn't just racist. There was also an unholy alliance between labor unions and progressives who were supporting immigration bans for their own reasons. So, immigration restrictions came from both racists and the late-19th-century, early-20th-century progressives.

It's no coincidence that immigration restrictions are one of the most important parts of this Progressive Era. It is an aspect of increasing centralized control and it's something that is unfortunately forgotten. You also had at the same time the creation of the Federal Reserve system and the nationalizing of the currency. You had the establishment of the income tax. You had the prohibition of alcohol. And you had immigration restrictions. All of these were the result of efforts to force and centralize into Washington the economic and social decision-making that had taken place prior to that on the individual level.

Today, the so-called Right wing of American politics is very skeptical of immigration. They understand that the income tax and the Federal Reserve and the prohibition of alcohol were about politics, but they still cling to this Progressive Era policy of immigration restrictions as something that was good for the United States then, and which is still good for us now.

BZ: So, each party has found something to love in immigration restriction – there are specific axes that the Left and the Right have to grind – but none of those reasons have anything to do with the country as a whole.

Assimilation: Si o No?

BZ: My idea for immigration policy would be to set up a whole lot of kiosks at our borders handing out Starbucks cards, social security cards, and access to Craigslist so immigrants can go find work. I don't think that view is shared by the majority of Americans, although it is shared by many.

AN: It's not shared by many Americans at all, actually, which is surprising considering our great history and its success with immigration. If you go back to Ben Franklin, writing in the 1760s, he has this essay where he rails against the German immigrants in Pennsylvania – about how soon Pennsylvania is going to be entirely German-speaking, and how the Germans are a bunch of oafs and lazy fools who can't even work or assimilate into our society. In the 1840s, the complaints were about how the Irish were subhuman and couldn't assimilate, and don't work hard. In the 1870s, '80s, and '90s it was about how the Jews were coming in and were different from our society and couldn't ever assimilate. After that it was the Chinese and the Italians that could never become American. They would never rise above the terrible culture they left behind or do better than that. But today we look back at those arguments, we rightfully laugh, and see how ridiculous they are because we are their descendants. We all have ancestors from those areas of the world mixed in our genes, and we're all American despite the numerous places our ancestors came from.

To hear Americans today – especially those who are familiar with our historical success at assimilating tens of millions of immigrants into our society from throughout the world – say that today's immigrants, Hispanics and Asians, can't possibly assimilate, and that their cultures can't possibly succeed in a modern country, or that they'll never earn enough money, or they'll never get educated, is the shortest-sighted opinion that you can imagine based on the total success of this country with immigration over the centuries.

I think the American Exceptionalism argument is overplayed a little bit, but this is one area where I think all Americans should be very proud. We are truly exceptional in our ability to assimilate and integrate immigrants over the long run. It troubles me deeply that so many people don't recognize that about our country.

BZ: We invented the product of peaceful assimilation into our borders. That is our secret sauce of success as an economic and freedom-loving powerhouse, and a shining city on the hill.

I struggle when I hear the reasons (and I hear lots of them) for keeping away illegal immigration and "closing the borders" (as if that's even possible), because I find them to be so bankrupt. I struggle even to elevate the arguments on the other side so that I can respond to them. What are some of the arguments, Alex, that those folks who favor a more restrictive immigration policy raise?

AN: Some of the main arguments are about how immigrants are going to destroy our culture when they come here.

BZ: It's strange, because our culture is one of an accumulation of cultures. There is no purely "American" culture. It was always reflective of the immigration waves that have come into our country.

Look at our language: Our language has grown so much as we pick up the words and phrases of immigrants. To be American – our holidays and everything about us –is to have a mixed culture. The sense that there is a purely WASP-type American culture is absurd.

Alex, not surprisingly, we have our first caller. Let's talk to Marie, in Sonoma. Marie, welcome to the show this afternoon. How are you?

Marie: I'm fine, thank you, sir.

BZ: How can we help you?

Marie: It does affect our culture. I'm speaking of the Mexican people that are coming in. They speak Spanish to their children at home until they go to school, and then the taxpayers have to pay to teach them how to speak English, and then I'm supposed to learn how to speak Spanish. When I go shopping and ask somebody for a product they look at me and won't speak English, so I'm supposed to learn how to speak Spanish so that I can shop in my own country? I don't live in Mexico. I live in the United States.

BZ: Marie, I'll respond first – and then Alex, I'm sure would like to add something. First of all, people are free in our country to speak in their homes whatever language they want. They can worship any religion they want. They have, and always have had, total freedom of conscience. If they want to survive in the economic system, they will have to either learn English or suffer limited job opportunities. As to having to speak a language when you are helped in a store by somebody who doesn't speak English, then Marie, you will simply not patronize that store.

Marie: Correct.

BZ: You could take your dollars and say, "I will only go to a store where the sales help speak English." That is, you are exercising your freedom and delivering a message to the manager of the store. The manager of the store might tell his employees, "You are costing me sales. Speak or learn English, or you won't be hired." Alex, anything you wish to add for Marie?

AN: Yes, I would. According to every poll and survey that's ever been done, 97 percent of those who are born in the United States from Spanish-speaking parents speak English. Of the third generation, those whose grandparents came here from a Spanish-speaking country, the English fluency rate is 100 percent.

Marie: Then why are we teaching them to speak ...

AN: Excuse me, let me just finish my point. The rate at which these people have learned English is faster than any other non-English-speaking immigrant group in American history. It's faster than Italians. It's faster than Jewish immigrants. It's faster than Russian immigrants. It's a lot faster than German immigrants ever learned English. I've had frustrating experiences, too. I don't speak Spanish. I don't speak another language. I only speak English. To know that those frustrating experiences are limited in time and that their children will be fully English fluent and assimilated in our society is something that I think you and everybody else who is concerned about this issue can look at as a positive. In the long run, the next generation is going to be fully English speaking.

Marie: How come in our schools taxpayers are spending money for extra practice to teach these children English?

AN: I would say that's a problem with the school system. That's a problem with the government wasting money on silly programs to teach people a language that they already speak very well, or you have kids who are coming in themselves, who are immigrants themselves, who don't speak English very well.

BZ: Marie, as a matter of school policy – and California is one of the offending states – there is a discussion going on among teaching professionals about whether we should offer bilingual education. I say we should not.

Alex, I have a rule. Whenever we have any reform movement in this country – whether it's tax reform, immigration reform, welfare reform – we are always reforming a governmental policy and we are never reforming private behavior. Government doesn't learn that if they wouldn't interfere to begin with, there wouldn't be a need for the reform of what government does so badly. Whenever one hears the word "reform," it is really just fixing another government-created mess.

Trump's Pen & Phone

BZ: We will soon have a president, who, to a substantial degree, got elected on an anti-immigration and anti-immigrant platform. Immigration is at the forefront of presidential politics, and is an important post-election issue. We need to sort out the facts from the hyperbole, and Alex is the best person on the planet to help us do that.

Donald Trump started his campaign on a very inflammatory, anti-immigrant level, and he has become identified with that issue. We understand that in presidential politics there is always a huge gap between what a candidate says and what an elected official does, but we have to start somewhere. So, as best you can tell, taking President-elect Trump at his word, what will immigration policy look like in America after he gets his arms around the powers of government.

AN: Based on his position paper that he published last year, he's very specific on several issues. One is a huge increase in border enforcement, including the border wall. "Build the wall" was the number one chant at his rallies. He wants to build a wall, 1,000 miles along the border with Mexico, to try to stop unlawful immigration.

In terms of interior immigration enforcement, he wants to triple the number of Immigration and Customs Enforcement (ICE) agents who run the deportation programs.

He also wants to institute a program called "E-Verify" nationally. Under this program, every time you are hired as an employee, the employer runs your name and information through a government database to make sure that you're legally eligible to work in the United States. What he wants to do is make it so that every time a private employer hires somebody they must use that E-Verify system.

He wants to end the Deferred Action for Childhood Arrivals (DACA) program, which President Obama put in place through executive action in 2012. That deferred the deportation of some illegal immigrants who were brought here as children, who had met certain categories – who were not violent criminals – and gave them a temporary work permit. He wants to have mandatory detention for all illegal immigrants who are apprehended in the United States, making sure that they spend time in a detention facility.

All those things are worrying to me, but the two most worrying things are that he wants to decrease the amount of legal immigration into the United States – he says he wants to cut the number of green cards for workers down to about zero until the economy fully recovers and the unemployment rate is zero – and that he wants to end the refugee program, either entirely, or just for Muslims who are immigrating into the U.S. through the program.

BZ: Obama has refined the art of the executive order. President Bush apparently issued more executive orders in number, but Obama's were more far-reaching. How much can Trump do with his, quote, "pen and his phone," i.e., via executive order, versus how much requires legislation?

AN: He can end the DACA program immediately, because that was an executive action. He can either revoke it for all the current young adults and kids who have it, or he can just make it so that they can't reapply. It would run out in about two years for all those people. He could do that on his own.

He could also kill the refugee program entirely on his own, because in law the president has a lot of authority and discretion in accepting refugees, and putting in place a lot of the vetting procedures. They could make that so burdensome that they could cut out virtually anybody from there.

Decreasing worker immigration is trickier. He couldn't change the numbers, in terms of the law, that are allowed to come in legally, but he could get his regulatory agencies to craft new rules and regulations based on older interpretations of existing law, to put in place more burdens, making it more difficult for these people to come in. He could shrink that entirely or kill it almost all by itself.

He can't really expand the size of the immigration enforcement agencies, but he can try to force local communities and local and state police departments to cooperate with the Federal Government more.

BZ: That triggers interesting constitutional questions, such as "anti-commandeering." A little-known but important part of constitutional law is that the Federal Government is not permitted to command or compel local law enforcement to enforce federal law. They simply cannot do it. They might be able to do it coercively by somehow denying other federal benefits to states and localities, but the Supreme Court is sensitive to that issue.

If you think about sanctuary cities, the issue of getting the assistance of local law enforcement is constitutionally tricky, isn't it?

AN: Yes, it is constitutionally tricky. The Obama administration did it from 2009 to 2011 and it triggered a pretty big backlash, so they backed down when it came to immigration enforcement. What's interesting is the Obamacare decision, Obergefell v. Hodges, actually limits the ability of the Federal Government to use funds to coerce states into adopting certain activities. Even more so than during the first term of the Obama administration, the Federal Government is limited in how it can use funds to coerce states into going along with its opinions. If they do, it has to be very clearly and explicitly spelled out in the law why these funds are being denied or attached to certain cities, like sanctuary cities for instance. That's not currently in the law. You would have to get Congress to pass a law, too.

BZ: What's so interesting is that the sanctuary cities' movement – San Francisco, New York, and other major urban centers – is on the right side of the Constitution in their refusal to assist the Feds in enforcing federal law. It's a very interesting aspect of the Tenth Amendment of the Bill of Rights.

Immigration Economics 101

BZ: Alex, you have helped us understand the bullet points of President-elect Trump's goals. I'm now going to ask you to speculate a bit. How might economic and social life in America be different in a Trumpian immigration era?

AN: Let's start with the extreme example. A lot of Trump's statements during the campaign were about how he was going to deport all the illegal immigrants. If you did that, not considering any government costs associated with it, it would shrink the size of the U.S. economy by about 5 percent initially and make it more difficult to grow after that. If you decreased the supply of the high-skilled workers coming into the United States, that would also reduce growth in many high-skilled industries. Both of these things contrast quite a bit with his stated goal of wanting to increase U.S. economic growth to 4 percent per year. In fact, it's virtually impossible to get up to a 4 percent economic growth in the United States without a rapidly growing population of people who are workers and consumers. The best way to do that is to actually increase immigration, not to decrease it.

All these enforcement procedures are going to cost a lot of money in tax dollars. They're going to either have to come from other programs, increased taxation, or increased debt. That will also be a drag on economic growth. That's just the economics of it.

In terms of the social impact, it will have a devastating effect on millions of Americans who have immigrant families in the United States. To give you an example, right now there are about four and a half million American citizen children in the United States with one or more parents that are illegal immigrants currently. That's a huge impact on people who are mostly younger in the U.S. whose parents are here illegally. That doesn't count the illegal immigrants or other immigrant communities in the U.S. that would be more reluctant to cooperate with police if they knew that the police were a deportation force everywhere. So, the social and economic cost would be pretty high.

BZ: Are there any beneficiaries of Trump's program?

AN: There are two main groups that would be the beneficiaries: one guaranteed and one speculative. The guaranteed beneficiaries would be the employees of the government who carry out these orders and the government unions that represent these folks. Perhaps private prison corporations or other corporations that do government contracting and provide these services would also be the beneficiaries of this.

Another group that might be a beneficiary, looking at just one portion of the academic literature, are some Americans who have less than a high school degree, and who are 25 years or older and working in the United States, because some of them might see moderate nominal wage increases. Now, the prices for everything they buy will go up, but the dollar amount on their paycheck might go up by about 3–8 percent depending on the estimates.

That size of that group, however, is 8–9 percent of the entire U.S. population. Every other group of workers in the United States –graduates of high school only, people with some college, and college and above –would lose. The losers from restricted immigration are about 91–92 percent of the population, while the potential beneficiaries are only about 8–9 percent.

BZ: That triggers the well-known concept of "the seen versus the unseen." Frédéric Bastiat, an economic philosopher in the middle of the 19th century, observed that often the small benefits are seen and visible, and the profound detriments are dispersed and invisible.

The very small segment of the population who gets a raise or gets a job will feel it and they will be aware. They will say, "Thank goodness for Trump – I'm making $35 a week more!" But the overwhelming majority of the population, who is paying through higher taxes and a higher cost of goods, will not know that it is a result of the policy. You're not going to say, "Darn immigration policy, now my apples are four cents more." It's nearly invisible, but the overall effect on the economy is enormous. It's an economic dynamic that is very important, and that really has a profound effect upon how people feel about a policy.

AN: That's exactly right. One of the other big, unseen effects is that a lot of businesses are going to see their customer bases deported, and then they're not going to be able to hire Americans. They're not going to be able to buy the capital goods that stock their businesses, and they're not going to be able to sell the products that they have produced and planned. As a result, they're going to have to fire people who are currently in their business.

There is no path to prosperity by decreasing the supply of people in the country. It diminishes both the supply and demand sides of the economy and it makes almost all of us just a little bit poorer, and in the long run it makes all of us poorer.

BZ: The economic history of our country shows, without exception, that during periods of liberal immigration policy, economic life accelerates. It gets better and better. During periods of constricted immigration policy, we are either flat-lined or worse off. The evidence is overwhelming and it's a question of all of these emotional feelings crowding out the data. The data never gets to the surface and never gets to be part of the debate. It's a data-less debate.

AN: It is. I find the issues that are most emotional are the ones where foreigners are involved in some way or another. Foreign policy, trade policy, immigration policy ... We have a portion of our brain, as humans, that makes it difficult to comprehend that having more people here from other places helps us increase the size of the economy and increases our standard of living, and allows more opportunities for trade and business. It's true in immigration, and it's true in trade, but it's very hard to get those types of ideas across. We've been trying since Adam Smith wrote The Wealth of Nations in 1776, and I think we've made a little bit of headway since then, but not nearly enough.

"They Took Our Jobs!"

BZ: Now, Alex – the anti-immigrant movement, if I can call it that, is allegedly driven by the fact that immigrants, quote, "take our jobs." Oh, how I hate that phrase, because it is nobody's job to keep – it is only your job to retain if you are the best person to do it. People also argue that immigrants are taking our welfare dollars. How accurate is that belief?

AN: It's completely wrong. If you look at the most legitimate anti-immigrant research from peer-reviewed academic journals, you find that immigration increases the size of the economy and increases the wages for all Americans far more than any downsides from it. One of the main reasons for this increase is that immigrants are different than Americans in terms of their skills and experience. So, if you're going to have your wages cut or you're going to compete for labor with immigrants, they've got to be very similar to you in terms of education, language ability, and experience. Most immigrants have very different levels of experience, education, and levels of language ability.

There's just not that much competition to begin with. Even if you look at areas of the labor market where you would expect to see a lot of competition between Americans and immigrants, you don't see job losses for Americans at all. You see increases in jobs. The evidence on wages is mixed, but all of the estimates come in with a small net-positive effect of around 1 percent.

When everyone talks about immigration, they assume that a big increase in the supply of workers would diminish wages. If that was the only thing that happened, then it would be true, but immigrants also buy things and increase demand, which also increases the demand for jobs, and in turn a demand for higher wages. You have both the supply effect, and demand effect that pushes up wages for most Americans.

Now, I spend a lot of time researching the welfare angle. First, if you're a legal immigrant to the U.S. on a green card, you don't have access to almost any means-tested welfare benefits for the first five years that you're here. If you're an illegal immigrant you have zero access to them. If you are on a guest worker visa, like an H-1B, or you're here as a student, or anything like that, you have zero access to these benefits. There are already pretty good laws in place to prevent that from going on.

When you look at immigrants who are eligible to receive welfare in the United States and compare them to Americans who are eligible to receive the same benefits, immigrants are much less likely to use these programs. When they do use them, the dollar value of the benefits consumed is much less than it is for native-born Americans. Just to give you one quick number on that: If native-born Americans were to use Medicaid at the same rate and at the same amount as immigrants, that program by itself would be smaller by 42 percent. Immigrants are, as a group, much less likely to use these benefits than similar native-born Americans, even when they are eligible, and most of them aren't.

BZ: So, there is no data-driven argument to be made that immigration as an economic activity has a negative impact on our country; and there is data that it has a profoundly positive impact, especially in those lower-wage areas of our economy that are dependent on immigrants, such as agriculture in the Northwest and in the South, and in California and in other areas, where there is simply nobody to do the work without the immigrants.

What are the areas where immigrants supply a labor need that would otherwise simply be unmet?

AN: I think there are many jobs that Americans would do if the wages were much higher, but if the wages were much higher these jobs wouldn't exist. Even a lot of anti-immigrant people admit that the agriculture industry, for example, would largely die without immigration. We see that the economy would adjust if we got rid of all the immigrants and the farms went out of business and the wages went really high, but it would adjust in such a way that the economy would shrink. In the same way that the economy would adjust if we got rid of other people, or would invent things to increase production if we got rid of electricity, we would all adjust. The economy would adjust by shrinking.

Another industry that relies on foreigners is the hi-tech industry, especially in Silicon Valley in the Bay Area. Large numbers of field workers, whether they be computer engineers, IT specialists, etc., work in these industries that are internationally competitive. They need to have access to an international labor market to maintain their international competitiveness, and because they have to sell their products on the international market, they need to be able to compete on the international market in terms of labor as well.

So, without these types of liberal immigration policies, these industries would have a much harder time competing internationally, and indeed growing and providing jobs for Americans.

Crime and Immigrants: A Dubious Dilemma

BZ: The first speech Donald Trump made when running for president was famously about immigrant rapists and robbers, i.e., criminals. It was about how they are increasing the amount of crime being perpetrated on American citizens. Help us understand what the data is on criminality within the immigrant population versus the population as a whole.

AN: Immigrants are far less likely to be convicted and incarcerated for violent and property crimes than virtually any other group of Americans. They're about one fourth as likely to be incarcerated for those crimes as other Americans. It's important to know that if you're arrested and convicted of a crime in the U.S. as an immigrant, you serve your sentence before you are deported. We're not getting into any kind of tricky numbers here. This is a straight-up comparison.

What's remarkable, though, is that even when you look at the incarceration rates for illegal immigrants – and you have to try to estimate those, because it's not reported directly in the census data – illegal immigrants by themselves are much less likely than natives to be incarcerated for these types of offenses. A lot of them are in federal prison temporarily before being deported just for immigration offenses, not for other, real crimes that you and I are concerned about.

This is one of the biggest myths out there today – that immigrants commit crimes in disproportionately higher numbers than Americans. It's simply not true. It's the opposite.

BZ: Also, I believe it's the case that culturally, especially within the Hispanic and Asian populations, they have strong family values. Because of this, and I really hate to use the word "they," because it lumps too many people into a generalization, they are simply less prone to commit crime.

Proposition 187: California Sneezes –The GOP Gets a Cold

BZ: Alex, I want you to tell us the fascinating and perhaps forgotten story of California's Proposition 187 – Pete Wilson's anti-immigrant, mean-spirited bill in California in 1994 –and how it profoundly affected who votes Republican and who does not. It's a fascinating story which portends for the future. Much of the Republican Party's relationship with immigrants in general, and the growing Hispanic population specifically, can be traced back to a watershed event that affected California as well as the Republican Party nationally.

Tell us the story of Prop. 187 and its aftermath.

AN: The story begins in 1990. Pete Wilson, the Republican, was elected as Governor of California. That year he split the Hispanic vote about evenly with the Democrats. Shortly after that, California was hit by a recession, the end of the Cold War, and a decrease in funding for defense industries. It really hurt California.

Pete Wilson and the GOP at that time, in the early 1990s, decided that they were going to blame immigration, and illegal immigration specifically, for all the problems that the state was facing.

BZ: This was a political decision, not a data-driven decision. This was, "Hey, I have an idea: Let's blame Hispanics."

AN: Exactly. It was an entirely politically driven decision. At the same time, a group of conservative Californians got enough signatures for something called the "Save Our State Initiative," or Proposition 187. It would have cut all social benefits for illegal immigrants, which I do support, but the second portion of it was terrible, and it would have made every single California state employee an immigration agent. They would have had to report to the INS at the time [now ICE] all illegal immigrants or suspected illegal immigrants that they came in contact with.

Now, the effect of this proposition was that it galvanized Hispanic support against the Republicans in a way that we had never seen before. Although Pete Wilson won re-election in 1994, his Hispanic vote totals dropped to 25 percent from about 50 percent in 1990, and then they continued to fall after that for all other Republican gubernatorial candidates, at the exact same time that the Hispanic population in the state was increasing.

You also see this trend in terms of partisanship – in terms of registration for political parties. Hispanics were increasingly registering as Republicans from 1980 to about 1991. There was a 20-point shift toward Republicans amongst Hispanics in California. Beginning in the early 1990s – when Pete Wilson started it – to 2000, we saw a 30-point swing against the Republicans in registration in California, when Hispanic numbers were much greater.

You see a huge surge in naturalization – that is, Hispanic immigrants in the State of California becoming citizens so that they could vote. They voted overwhelmingly against the Republicans and for the Democrats. You have to contrast this, at the same time, with the State of Texas, which under Republican leadership, did the exact opposite. They reached out to Hispanics, said, "We need immigration reform," and by the end of this period the GOP was getting half of the Hispanic vote in Texas, while in California it was getting about 20 percent. They both have the same percentage of the population that is Hispanic. One is an overwhelmingly Republican state. One is an overwhelmingly Democratic state. For me the lesson is clear. The GOP needs to reach out to immigrants, and not blame them for problems.

BZ: Amen. Thank you so much, Alex. Have a nice Sunday.

# 7 – RECENTERING THE CONSTITUTION ON THE INDIVIDUAL

## Guest: Clark Neily III

Interview Date: April 6, 2014

Bob Zadek: I've been practicing law for almost 50 years. I love what I do, but, if I could alter how I have spent 50 years practicing law, I'd rather be litigating constitutional law cases involving economic liberty, property rights, free speech, and school choice. That would be making a difference.

Today's guest does exactly that. I'm happy to welcome to the show, Clark Neily. Clark is a Senior Attorney at the most important public interest law firm in the country, the Institute for Justice. Clark is the Director of IJ's Center For Judicial Engagement, and has written a book called Terms of Engagement: How Our Courts Should Enforce the Constitution's Promise of Limited Government.

Whenever I get a mailing from the IJ I actually have to wipe the moisture from my eyes. I do whatever I can to support their work. They are trying to undo the damage caused by the Supreme Court's subordination of our rights to earn a living, to enter into contracts, and to cooperate amongst ourselves in mutually beneficial transactions.

Let's flash back to 1788, to the Constitution the founders gave us – the Constitution that promised us economic liberty, maximum personal freedom, limited Federal Government, and an unintrusive government of very limited and defined powers.

The question I couldn't answer until I read Clark's book is, "How did we get from then to now?" Did the founders give us a flawed Constitution? One that was doomed to break every one of its promises? Or did the founders do their job, and somehow, the country has gone astray? If we've gone astray, how do we get back?

With that introduction, nothing could make me happier than to welcome Clark to the show.

Clark Neily: Thank you for that gracious introduction. It's so nice to be here.

An Epidemic of Fake Judging

BZ: I'm sure you will agree that the political and economic place our country occupied for 120 years was exactly what the founders promised us: limited government, economic freedom, a small, unintrusive Federal Government, and limited powers. Most of America was not all that aware that the Federal Government even existed, it had so little involvement in our lives. What's the headline? How did we get from that to what we have now?

CN: I think the headline is that we are experiencing an epidemic of fake judging in this country. As you correctly point out, things started to go south during the New Deal, when the Supreme Court talked itself into the idea that it was acceptable for the courts to simply take a pass, and refuse to enforce the Constitution in any meaningful way. It wasn't long before they began rubber-stamping constitutional violations by state and local governments, particularly in the areas of property rights and economic liberty.

Basically, we have real judging in some constitutional cases, where the Supreme Court considers it important enough to do real judging, but in the vast majority of cases we have fake judging, where judges simply rubber stamp whatever the government is doing without making any serious effort to interpret or apply the Constitution. It has been a disaster, and that is where we are today.

BZ: That's a perfect starting point for – I don't want to say the beginning of the end, that's too pessimistic – but for the change in the core political nature of our country, and the relationship between citizens and government. It started with the New Deal.

Give us a flashback. What was political and economic life like in America, from the day after ratification of the Constitution until somewhere around the New Deal?

CN: That's a big question, and I'm not a historian, but I can tell you what my understanding of the Constitution is. Until the time of the New Deal, the courts made a consistent effort to try to get the Constitution right. They didn't always get it right. You may recall that there were a number of egregious decisions, including Plessy v. Ferguson, which announced the doctrine of separate but equal, and simply ignored the principles of the equal protection clause of the Fourteenth Amendment.

During the time of the New Deal, however, the Supreme Court institutionalized this approach to judging that I call "fake judging," or "judicial abdication," where courts took a pass on even trying to get the Constitution right. They didn't even try to apply the provisions of the Constitution that limit federal power and protect our economic liberties and property rights. They made a formal and systematic practice of fake judging. Frankly, the Supreme Court ate from the tree of judicial abdication during the New Deal, and found that it liked the taste. Ever since then, one right after another has joined the conflagration, so essentially the doctrine of federalism became something the Supreme Court would not enforce in any meaningful way.

BZ: How did the Constitution set forth the relationship of the Federal Government to the states and to the citizens? What were the core principles in the Constitution, and how exactly were they expressed? The Constitution was, of course, the product of five months of deliberation, and years of thought before that.

CN: The U.S. Constitution is a work of political genius. It is, in my judgment, the greatest secular document ever written. Notwithstanding that, it has some flaws, the greatest of which was slavery.

The Constitution got the principle of individual liberty and limited government right. The Federal Government derives its powers exclusively from the Constitution, and from the powers that are delegated to it by the Constitution. These were intended to be limited. You can read them all in about 30 seconds. They take up about a page-and-a-half of a small pocket sized Constitution. They include things like coining money, punishing pirates, establishing bankruptcy rules, and an army and a navy, and they don't go very far beyond that.

The genius of that plan was that instead of trying to list all of the rights that we as individuals possess, they said, "Let's limit government by only giving it a handful of powers, and anything we haven't specifically delegated to it becomes a right and a liberty."

For example, the Federal Government has no power to act in the area of occupational licensing. The Federal Government has no power to act in taking away our property, or limiting who can print what in a newspaper, since none of these powers were delegated to it by the Constitution. It has no power to interfere with our liberty in these areas. This design worked well for about 150 years, until the Supreme Court threw it off the back of the Constitutional sled.

How We Lost Our Economic Rights

BZ: Just so our friends out there understand the importance of this, the premise was that it was not for the government to give us rights, but rather, that all power – all rights – reside in us as individuals already, simply because we are human beings. We collectively surrender a very limited number of those rights for the ultimate benefit of protecting ourselves and our property. The premise was that the rights are not for the government to give us, but for us to surrender to the government. Today it is all flipped around, and we hope the Federal Government allows us to do things. There is an assumption that we have no rights except those which the government gives us.

Clark, you do a wonderful job delineating the difference between political and economic rights in your book. Help us understand what this issue of economic rights is all about.

CN: The Constitution recognized economic liberty in a multitude of various provisions, one of which stated, "No state may impair the obligation of contracts." For more than eight centuries of common law, the right to earn a living in the occupation of your choice has been recognized as one of the most important rights that human beings possess.

The Supreme Court threw that out during the time of the New Deal and completely turned that around, characterizing economic liberties as "non-fundamental," meaning not worthy of any meaningful judicial protection.

Another preposterous idea is that there's a bright-line distinction between economic rights and other kinds of rights. I don't know anybody who thinks of their life as consisting of distinct spheres, one of which is purely economic and involves salary, and taxes, and what you're going to spend on groceries, and one which is non-economic. A human life encompasses all of that. There are no bright-line distinctions. The Supreme Court tried to create these distinctions so that both the Federal Government and the state governments would have carte blanche to regulate our lives in any way that could be characterized as "economic." If it's earning a living, paying taxes, owning and selling property, or any of these things that the Supreme Court considers "liberty interests of an economic nature," it can be regulated. "Liberty interest" is a phrase that the Supreme Court uses to describe a right that it no longer wishes to protect; and that is what has happened to property rights and economic liberties.

BZ: What Clark just said should be punctuated by exclamation points after every word. The Supreme Court, during the New Deal, decided that certain types of core rights that humans have had under the common law in England suddenly became of subordinate importance to the government. This was because in the government's "central planning" mentality during the New Deal, Roosevelt and the New Dealers couldn't accomplish what they wanted without subordinating economic rights.

Rights that humans have had for eight centuries became a constitutional inconvenience. The Supreme Court subordinated the right to earn a living, to bargain, to cooperate, to shake hands and sign a document and say, "It's a deal." That is a profound change in our civic life.

Now Clark, you describe two important economic rights cases: The Slaughter-House Cases and Lochner. Tell us in a few words about these cases.

CN: The Supreme Court always held that the Bill of Rights, the first ten amendments to the Constitution, did not limit the power of state and local governments, but only applied to limit the Federal Government. In the wake of the Civil War, many southern states tried to keep newly freed blacks and their white supporters in a state of "constructive servitude" by denying them a whole range of basic human rights, including the right of free speech, the right to own guns to defend themselves, and very importantly, the right to earn a living, to make contracts, and to own property. The purpose of the Fourteenth Amendment was to empower the Federal courts to protect those rights that I have just mentioned.

Five years after the Fourteenth Amendment was ratified, the Supreme Court took a case called Slaughter-House, involving a government-imposed monopoly on butchers in New Orleans. It read the "privileges or immunities" clause of the Fourteenth Amendment – which was designed to protect economic liberty – and deprived it of force. It deleted an entire provision from the U.S. Constitution and reduced it to a practical nullity. It was arguably the greatest act of judicial abdication in the Supreme Court's history.

Judge Robert Bork, who is since deceased, tried to defend that approach by describing the privileges or immunities clause of the Fourteenth Amendment as an ink blot – as something legitimate for courts to simply ignore – because there was some ambiguity as to its meaning. In fact, the purpose of the privileges or immunities clause was quite clearly to protect property rights, economic liberty, the right to own guns, and so forth.

The Supreme Court managed to grope its way back in the direction of the Constitution by using something called "substantive due process." Putting aside for a moment the arguments over whether or not it was legitimate, the Supreme Court essentially tried to make up for having deleted the privileges and immunities language from the Fourteenth Amendment by using this "due process" clause.

Lochner v. State of New York was a case that involved a New York law limiting the number of hours bakers could work in a bakery. It was enacted for the purpose of protecting unionized bakeries, who had no interest in having their employees work longer hours, from the competition of immigrant bakers. It was designed to put these immigrants, who had no ability to compete with these large bakeries except by putting in longer hours, out of work.

BZ: Lochner was in 1905?

CN: Yes. The New York legislature, at the behest of the large bakeries and their unions, passed a law that capped the maximum number of hours that somebody could work in a bakery in any given week at 60. It was obviously done to thwart competition and protect the politically powerful.

BZ: Crony capitalism!

CN: Lochner was one of the greatest decisions the Supreme Court ever handed down. The five justices on the Supreme Court agreed that the State of New York was not trying to protect the health of these bakers, but was trying to protect the economic interests of large bakeries.

The Lochner decision was the high point of the Supreme Court's willingness to directly confront the actual motives of the government in economic liberty cases. Unfortunately, about 35 years later, the Supreme Court threw that completely out the window, and it said, "From now on, we are not going to be protecting economic liberty in any meaningful way. We will rubber-stamp whatever the government is doing, and we will no longer make any serious effort to determine whether the government's ends are legitimate (i.e., protecting public health), or illegitimate (i.e., protecting the economic interests of special interest groups that have political power)."

"Judicial Activism" vs. Proper Judicial Engagement

BZ: Whenever two individuals cooperate and enter into an economic agreement, whether it's for wages and hours, working conditions, or buying and selling property, it is a transaction that provides a benefit to each of the contracting parties, and that freedom is under attack by the government. Property rights are a profound inconvenience to a government that operates from a central-planning principle. So the Supreme Court, the handmaiden of a centrally planned government, has brushed aside the economic freedoms that have served our country so well for its first 150 years. It's these rights of economic freedom that the Institute for Justice (in general) and Clark Neily (in particular) fight so hard to defend.

CN: The main problem is that we have a judiciary that systematically refuses to enforce huge chunks of the Constitution. That's called "judicial abdication." We've had it for about 75 or 80 years.

Therefore, what we need for a constitutionally limited government is a properly engaged judiciary – one that insists on real judging in all constitutional cases without exception. That may sound like a modest request but it would be a radical departure from the current way the courts behave, where they give government free reign and reserve genuine judgment for only a few favored cases.

BZ: Clark, one of the services you can provide is to help clarify the phrase "judicial activism." The Right has been complaining about it for a long time. These words have become empty labels so that nobody really knows what they mean, except that they mean something vaguely bad – like plaque in your teeth, or eating high-fat foods – explain "judicial activism" as you use the term, and how it is crucial in the fight for economic liberty.

CN: Judicial activism is practically meaningless. It is something someone says when they don't like a decision the Supreme Court has made, but they don't want to make any effort to explain or articulate their disagreement. It's a term that people with no coherent interpretation or understanding of the Constitution use to throw rocks at judges who hand down decisions they don't like.

The term "judicial activism" is often used when a court strikes down a law or limits the government in some way. I guarantee you that every time you hear a politician using the term, "judicial activism," they mean, "Oh, the Supreme Court wouldn't let us enforce this law. They struck down this legislation that we enacted."

Guess what? The Constitution imposes significant limits on governmental power, not the courts. Courts essentially read large portions of the Constitution right out of the document. People have gotten used to the idea that courts should rarely strike down laws, when in fact, courts should frequently be striking down laws; that is, if they are being faithful to the Constitution, which they're not.

Between 1954 and 2002, Congress enacted 15,817 laws, of which the Supreme Court struck down just 103. That is 0.6 percent. Does anybody seriously believe that Congress is getting it right 99.4 percent of the time? I think not.

BZ: Obviously, it is in the very nature of those in power to want to not only preserve but expand that power. Congress has in its very DNA the desire to preserve and expand itself. If something wants to expand its powers, anything that limits this expansion is an inconvenience. Since the Constitution limits the expansion of power by Congress, Congress must regard the Constitution as an inconvenience. Without the Supreme Court standing astride the Constitution, saying, "Stop. You cannot enact that law. That is exceeding your power," who else do we have? No one.

It's very hard for a citizen to initiate judicial action, and in any way stop the aggrandizement and accumulation of power by the legislature. Without the Supreme Court, we are powerless, and we have not had this Supreme Court since prior to the New Deal. There have been a few exceptions, like gun control and the guns near schools case, but basically the Supreme Court has not done its job. It is the only entity which can protect us, yet it seems to have lost its fidelity to the Constitution.

CN: We need to stop indulging this fantasy that the legislature and the executive branch will voluntarily comply with the Constitution. It never happens. If you want a constitutionally limited government, there's only one way to get it, and that is with a properly engaged judiciary. We need a Supreme Court that makes a genuine effort to enforce all of the Constitution, not just a few parts of it.

During the time of the New Deal, everybody understood that the Federal Government was trying to establish top-down control of the economy. Everybody understood that it was unconstitutional, and that the Constitution was specifically designed to prevent that kind of top-down management. But the Supreme Court essentially reinterpreted the Constitution.

The Constitution puts the individual at the center of our constitutional cosmos, just like the sun is at the center of the solar system. The Constitution puts the individual at the center of our system of government. What the Supreme Court did was flip that all around and essentially say, "No, it'll be government at the center of our system. We'll start with the presumption that whatever the government does is legitimate, and we'll make citizens overcome incredible hurdles to resist."

The Court kept adding barriers to the ability of citizens to successfully challenge the constitutionality of what the government does, to the point that the courts simply began to rubber-stamp whatever the government enacted, and so much of the Constitution was rendered meaningless.

BZ: Your book focuses on economic liberty, as does your career and the Institute for Justice. Economic liberties are those that most interfere with a top-down planned economy. Consider minimum-wage laws. A minimum-wage law should simply protect the right of a worker and an employer to agree on the appropriate wage and to contract with each other, for the mutual benefit of both. Consider all of the licensing laws that say that you have to go to school for 4,000 hours to become a hair-braider. All of these are government intrusions into the rights of individuals to economically cooperate with one another for the common good, and government should not interfere with that.

Freedom of contract – the right to cooperate together – and to buy and sell, are rights that were subordinated to other rights. We have to reclaim those rights, not only because it is important for our economic health, but also because it is important for our political health.

The founders knew this and protected freedom of contract. Although the Constitution didn't build an economic system, per se, economic freedom was clearly implicit, and it was these freedoms that interfered with a top-down government. Then the Supreme Court surrendered it.

CN: Over-regulation is destroying the engine of American prosperity. Let me say that again. Over-regulation is destroying the engine of American prosperity, and yet the courts stand by and do nothing, even when that regulation takes a form that is unconstitutional.

BZ: The high point of their protection was the Lochner case, and, interestingly enough, the Lochner case is despised by central planners. If you talk to those on the Left who are politically or judicially active, they despise the Lochner case. All the Lochner case said was that you cannot enact a law for the protection of unions to the detriment of people who want to work hard, and people should be allowed to work longer hours if they want to.

Another interesting thing is that Judge Bork, who was a bit of a hero for people on the Right, despised Lochner. He would have opposed everything that Clark hopes for in his book, and yet he became the darling of the Right, and even became a bit of a martyr when he wasn't confirmed to the Supreme Court. They even invented a verb –to be "Borked" – because he was so pilloried during the hearings.

CN: Judge Bork inspired whole generations with the idea of "conservative minimalism," or the interpretation of the Constitution as protecting a very narrow set of rights, along with the principle that courts should be extremely reluctant to restrain government and to strike down laws. That has been an absolute disaster for the country, and it is not consistent with the Constitution.

If you want to know why people hate Lochner, it is that Lochner made clear something that many people do not want to admit: the government lies in court.

For example, the State of Louisiana says that you need a license to be a florist – you actually need a government-issued license to be a florist in Louisiana, just like a lawyer or doctor. When government says, in court, "We're just trying to protect people from the physical dangers of unlicensed floristry," that is a lie. That law was passed for one reason, and that reason is to protect the economic interests of the established florist.

Lochner, in a way, called the government out on that. Everybody understood that that was the point of Lochner. It's embarrassing to have courts pointing at the legislature and saying, "You know what? Sometimes your motives are not pure or public spirited, and sometimes you are deliberately violating the Constitution to advance the selfish interests of some particular interest-group."

We know that happens all the time, but for reasons that still escape me, some people think it is indecorous, or otherwise unwise, for the courts to point out when the legislature is not advancing the public good.

Unlimited Government

BZ: You do a wonderful job in your book of explaining why judges do what they do. Judges are not mean-spirited or stupid men, individually or collectively, and have achieved a good deal to get to be Supreme Court judges. Why has the Supreme Court lost its fidelity to the Constitution? How did we get into this pickle?

CN: I wish I knew the answer, because maybe it would help illuminate the way out. I think it's a combination of things. As I mentioned in the beginning of the show, the Supreme Court talked itself into the idea, during the New Deal, that it was legitimate for courts to simply turn a blind eye to unconstitutional governmental action in many areas.

When the government violates property rights, courts will turn a blind eye. When the government violates economic liberties, like the right to earn a living, courts will turn a blind eye.

You get this actual doctrine or practice of judicial abdication, where it becomes an operating principle on the part of the courts to turn a blind eye to unconstitutional governmental action, and pretend not to see it. The reasons for that are incredibly complex, and I think they have largely to do with trying not to stand up to the other branches in order to avoid creating a "crisis of conflict" with them. And yet, that is exactly what the courts were designed to do! They were meant to stand up to the other branches and protect our right to constitutionally limited government.

BZ: The philosophy of the Court tends to hold that since the people elected the legislature, if the people do not like what the legislature does, they can vote their representatives out of office. They do not consider it their job to rewrite legislation. Their faith in democracy is the driving principle.

They have a far greater faith in democracy than our founders did. Democracy is hardly the secret of political success. Democracy just says that 51 percent of the people could step all over the rights of 49 percent. This blind faith in the abstraction called "democracy" is misplaced. The Supreme Court must step in because democracy – as a process – is flawed, and the legislature is flawed in its decision making.

CN: You're exactly right about the framers. They were well aware that democracy is like two wolves and a sheep voting on what to eat for dinner. James Madison called a democratic political system an "elective despotism." It is not the system that we fought for, nor is it the system we live in. We live in a constitutional republic where there are substantial limits on what majorities can do.

This blind faith in democracy, in "the people," is what causes the courts to give no pushback to a government that wants to restrict your freedom, and that is the exact opposite of what the framers had envisioned.

BZ: For our friends out there who are reading this, what powers do they have and how can they help get us back on track?

CN: It's a challenge, I'll tell you. Most of the problem is created by, and must ultimately be fixed by, the U.S. Supreme Court, because that's where lower judges get their marching orders.

Ultimately, we have to change the composition of the Supreme Court and only elect people who really understand and care about constitutionally limited government. I think the way to do that is to make sure that your U.S. senator understands that you will hold them accountable if they fail to deliver on the following promise: No new Justice will be confirmed who cannot articulate a concrete and credible theory of limited government that they will commit to putting into execution. We should have no more Supreme Court justices confirmed who do not have a credible and concrete theory of limited government. It is a travesty that they don't ask them that question in the current confirmation process.

BZ: Limited government: two words that most accurately describe the 4,600 words of the Constitution. We are calling for the judicial branch to be true to the core principle of our Constitution. We are not taking a position on abortion, or gay rights, or the minimum wage. We are not taking a position on any social issues. We are taking one position and one position only, and that is that U.S. citizens should be in a relationship with a limited government. With limited government, the citizens can act collectively and cooperate with one another in a way that will create the type of economic and political life that we all aspire to.

Clark, thanks so much for writing your book, and thanks for giving us an hour of your wisdom this morning. It's a wonderful book: Terms of Engagement: How Our Courts Should Enforce the Constitution's Promise of Limited Government. Nothing is more important to our political and economic life than that.

# 8 – LESSONS IN LEADERSHIP

## Guest: Thomas Fleming

Interview Date: July 5, 2015

Bob Zadek: Today we are celebrating two very important dates in the history of our country. Yesterday, the Fourth of July, was the 239th birthday of the Declaration of Independence – unless you believe John Adams, who said the adoption of the Declaration of Independence was July 2nd. Nonetheless, it is obviously a significant event in all our lives and in history. The other significant event, which happened today – only somewhat less important in the life of our country – was the birth of today's guest, Tom Fleming. With the warmest of birthday greetings, I'd like to welcome Tom to the show.

Thomas Fleming: I'm delighted and flattered to be here, and I'm looking forward to our conversation.

Patriots or Traitors?

BZ: Your most recent book is called The Great Divide: The Conflict Between Washington and Jefferson that Defined a Nation, in which you compare two very different patriots.

Before we get into the book and the topic of today's show, I'd like to pose a question. The founders are often lumped together collectively as patriots. Were they really patriots in the conventional definition, as people who are prepared to fight for their country and defend its right to exist? These patriots were not loyal to their country. In fact, they were disloyal to their country. Help me to explain the label "patriot" when given collectively to the founders.

TF: The label "patriot" only applies to the founders' patriotism for their unborn country, the United States of America. However, they were being untrue patriots to the country they were born into – the British Empire. They were committing treason, and they well knew it. When they signed the Declaration of Independence, John Hancock said (rather nervously) about his signature being at the top of the list, "We must all hang together." Benjamin Franklin said, "Yes, if we don't we'll all hang separately."

BZ: I knew about the Franklin quote, but I didn't know how John Hancock fed him the line.

TF: Yes. It's very significant, too. They knew that they were doing something extremely dangerous. They had seen what the British had done to rebels in Scotland and Ireland. They treated them with total ruthlessness. They hanged them. For the people they considered particularly bad, they gave them the drawn and quartered treatment. They chopped up their bodies. They confiscated all their land and turned their families into paupers. It was an utterly ruthless attack on these rebels and they knew the British were perfectly capable of doing the same thing here in America. That constitutes, to me, an act of huge courage on the part of these men. They thought that they could depend on their fellow Americans to defend them and follow their leadership. At the same time, they knew there were a lot of fellow Americans who didn't agree with them.

BZ: Seeing that we are in a sort of perpetual presidential campaign, your book seems appropriate. Many candidates try to identify themselves with the ideals of the founders, yet the founders were as far from monolithic as a group of men can be.

TF: You couldn't make a more important point, Bob.

BZ: It is almost deceptive when we read decisions written by Justice Thomas and Justice Scalia and Justice Roberts, who embrace the founding principles, and quote Madison or Jefferson in their Supreme Court decisions, because even if you pick one founder like Madison, he changed his views on government many times even during just the 1790s. The founders were refining their own views. So, if you say, "This is what Madison would have done," you have to say, "This is what Madison would have done in 1794." He would have done something different in 1799. It's strange to see judges and candidates for office identify their views with those of the founders, when their views were always changing.

TF: I think they're using the founders to bolster their arguments without any profound reference to what the founders actually stood for at any particular time. It's a legal operation to persuade the people out beyond the court. They do cite the founders when they can. But you're right that these founders did not agree fundamentally.

My favorite story, and the one that led me to write this book, was a comment that Martha Washington made after George Washington died. About a year after his death, a congressman came to express his condolences and they got to talking. She said, "The two worst days of my life were the day that George died and the day that Mr. Jefferson came to pay his condolences."

BZ: Oh, my God. There was so much tension between those two, and not much love lost.

TF: No, and this was a process. It started when Washington asked Jefferson to be his secretary of state in 1790, when they had considerable fondness and respect for each other. They soon discovered that they had a fundamental disagreement, and it's still haunting us today. That's why I call this book The Great Divide.

They disagreed on the nature of the presidency – whether it should be a strong political office, which was Washington's opinion. Jefferson's opinion was that if we made it strong, the president would turn into a dictator. This became a huge problem as Washington's presidency continued. They clashed on it again and again from various points of view. It emphasizes for me the importance of reading history and of getting the whole idea of what these founders went through –not just picking out quotes on what they were saying in 1794, but getting the whole scope of how their thinking evolved, and how they related to each other.

BZ: On the issue of the strong presidency, Washington and Jefferson could not have been further apart. In this whole discussion of the presidency, they were inventing a position in government that had never existed on earth.

TF: You're right. When I had the privilege of spending time with Harry Truman, working with his daughter on a biography of him, we had very candid discussions of American history. He loved history. He said to me one night, "Tom, the American presidency is the greatest office ever designed by the mind of man." I agree with that. It's a unique office that has rescued us again and again from near disaster.

BZ: The founders sat in a room for four and a half months in Philadelphia writing a constitution most of them believed was, to coin a phrase that's often used, "the last great hope for mankind." This meant that the stakes were pretty gosh darn high. They wrote the Constitution not just for America but for the world. The "Miracle at Philadelphia" was that – despite profound disagreement of 55 very strong-willed and, for the most part, very smart people – their collective intellect invented a government from scratch and a position, the presidency, that had never existed. You can't even imagine how visionary they had to be, or whether there was divine intervention or what. But to create the government and the presidency from scratch, with no historical precedent, almost can't be believed.

TF: It was an amazing feat. The key idea in history that most people don't understand is leadership. So many people confuse leadership with dictatorship, or with the mere issuing of orders. Leadership is a much more complex thing. The leader can inspire people to agree with him. He can persuade them to agree with him. This is what George Washington did during that convention.

Washington kept a diary. Half of the evenings, he listed where he went each day, and half of those evenings there's no record. We are convinced that he spent those evenings talking to members of the Constitutional Convention and persuading them to create the presidency that he thought the country needed. James Madison made notes on the whole thing – a very important book I might add [Notes of Debates in the Federal Convention of 1787]. He said, "No one signed the Constitution with more enthusiasm than General Washington."

BZ: When you read Madison's notes on the Constitution, there's almost no reference to Washington, because publicly Washington kept his cards very close to the vest. He almost didn't speak a word during the whole convention.

TF: That was part of the rules of the game. In the convention, he was the chairman, and the chairman was not entitled to give speeches or anything like that. That was understood. That was based on how the Continental Congress operated. Washington was making this new office a believable thing. One of the reasons that a lot of people, not everybody in this respect, but a lot of people decided he was right was because they knew he was going to be the first president, and they trusted him in a very profound way. He had a chance at the end of the Revolutionary War in 1783 to become a dictator. Oliver Cromwell chased the Continental Congress into the woods and made himself the leader of the country in the wrong way, and he resigned from office.

BZ: Tell us about that famous King George quote when he discovered that Washington turned over his sword after the Revolution.

TF: Yes. I love the quote. I tried to do it the way King George might have said it – he stuttered when he got excited. He said to the man who told him that Washington had done this, "If h.. he d.. d... does that, he'll b.. be the g.. g.. g... greatest man in the world!"

BZ: Once again, there was no history of a triumphant general ever saying, "Okay, I'm going back to the farm. It was nice to have served you. Here's my sword."

TF: There was this one guy, Cincinnatus, who went back to his farm way back in Roman times, and was revered for doing it, but no other Roman did it. So many of the others seized power and tore the country apart and so forth. All the way through history, the tendency of the generals has been to govern. That's all there is to it. They say, "Hey, I won the war. I'm going to run things."

BZ: Cincinnatus is interesting because after the American Revolution a society was formed: The Society of the Cincinnatus, which you could only be a member of if you were a veteran of the Revolution or a direct descendant of a veteran.

TF: Yes, if you were an officer in the Revolution. It was for the officers.

BZ: Washington was a member of the society, if I'm not mistaken.

TF: He was, yes.

BZ: He didn't like to march with them because it was a hereditary position.

TF: He wrote a very interesting letter to Thomas Jefferson when this society was created in 1782 and '83 asking what he thought. Jefferson said, "If you can't prevent them from making it a hereditary institution I wouldn't even join it." Washington was very concerned that the institution was needed because so many of these men had spent so much time in the Revolution that they were penniless. They needed the kind of help that they were pledging to give each other in this organization, so he didn't quit, but he did make it very clear that they would not have any voice in politics. He told them, "I'll always agree to be your president if you don't try anything like running the country. It's not going to happen if I have anything to say about it."

Diversity: The Key Ingredient

BZ: Now Tom, Jefferson and Washington could not have been more different. I know Jefferson's star among historians, and perhaps everyday Americans the past couple years, has been on the decline, but whatever one might say negatively – and there's a lot people can say about Jefferson – what's interesting to me is that each of the founders, for all their flaws, weaknesses, and biases, made in their way an invaluable contribution.

TF: No doubt about it.

BZ: The process of the Revolution collectively tapped into this enormous pool of complex and clearly flawed individuals, but somehow it managed to get the best of each of them, and it was this collective chemistry of getting the best of each of them that produced a successful revolution and, to understate matters, a successful country.

Now, tell us about the enormous divide. Jefferson was, of course, in Washington's cabinet. They were brothers in the Revolution, although they were profoundly different. Tell us how they started off as colleagues, working together, and how they drifted apart.

TF: Washington was a man who had learned to live dangerously. He had incredibly good nerves. For eight years, he fought this seemingly endless war. He stayed with the army. He never went home to Mount Vernon. The men had this sense that he was their guy. Their loyalty to him was personal as well as ideological or patriotic, and that was crucial to him.

Jefferson was not that kind of guy at all. He could not deal with misfortune. For two years, he was Governor of Virginia and he just didn't do a good job. That's all there was to it. The state was being invaded by the British and Jefferson could not force himself to get tough with the Virginia Militia, who wouldn't turn out to fight. As a result, there were British armies marching all over Virginia, and one of Jefferson's best friends remarked that he was ashamed to be called a Virginian. The state had behaved horribly in this crisis.

Jefferson once said to an American General, "It's my job to issue the order, but not to enforce it." He had a very tame idea of how to govern. He didn't like to govern because he knew that governing made people angry, and he couldn't deal with that sort of emotion. He couldn't live dangerously, you might say.

BZ: That plays directly into my next question and observation. Jefferson was so conflict-averse that even when he had to take on other luminaries during the Revolution, he would often have others do it for him. He'd be behind the scenes. He hated direct conflict whereas Washington grew through conflict. While he may not have relished it, he certainly didn't shy away from it. It was part of life. Jefferson ran from conflict.

TF: Oh, absolutely. Politically, Jefferson was ready to start the conflict, but he didn't want to be the spokesman. Instead he got people like James Madison or James Monroe to be his spokesmen in the arena, you might say.

BZ: The colonists and newspaper men who did Jefferson's bidding.

TF: Oh, yeah, he had a lot of them, too. At one point, when he was secretary of state, he had a man on the payroll of the State Department publishing a newspaper, The National Gazette, which was attacking Alexander Hamilton, the Secretary of Treasury, and President Washington. This was in the atmosphere of terror with the French Revolution going wild over in Europe. The National Gazette published a cartoon of President Washington strapped to a board being carried toward a waiting guillotine.

BZ: Oh, my goodness.

TF: This was sponsored by the President's secretary of state. Jefferson was, his friends liked to say, a very complex person. He was. He had great talents though, and they were all verbal. He had an amazing ability to sum things up and to describe what we were fighting for. The Declaration of Independence is his one great claim to greatness. There you have Jefferson at his best, coming up with these marvelous phrases that echoed down through the centuries. It was the Declaration of Independence that made the American Revolution a world-transforming event.

In the next 100 or 150 years, there were 200 other declarations of independence all over the world, and they all echoed Thomas Jefferson's declaration. It was a world-transforming event, and he worked very hard at getting the words right in this thing –that opening phrase, "All men are created equal."

BZ: "We hold these truths to be self-evident."

TF: It reverberates through our society as a matter of fact.

BZ: This reinforces my observation that Jefferson, for all his flaws, was a dreamer. Washington was the ultimate pragmatist and Jefferson was the dreamer. Jefferson could do the dreamy, theoretical, flowery language better than anybody else. His dreams were essential to give momentum to the Declaration. Everybody had their way of contributing. They all were flawed men. They weren't gods; they weren't deities. The magic is that the Revolution got the best of all of them. It's that "secret sauce" that caused the Revolution to be successful.

TF: Yes. All these different contributions were the prime reason they could operate, and win the war and create a nation. The essential person in the whole game was Washington. He was what some people call the "indispensable man." A recent biographer of Washington has called him a "visionary realist." He meant that he was a realist, but that he also had this absolute conviction, a deep faith that America had a message to transform the world. He believed in this whole thing. He loved Jefferson's Declaration of Independence.

After the Declaration was published, Washington read it to his army. That leads to one of the great visionary moments of the Revolution. The army was in New York City at the time. Meanwhile, there was a surge of mob anger racing through the city, and there was a great statue of George III on a horse. The people rushed down and got ropes. They dragged this beautiful bronze statue down with a huge crash. They chopped it up. Somebody grabbed the King's head and hid it someplace. It was a visionary moment of what Jefferson was saying in the Declaration. It is one of the great things that I treasure as a sign of the power of the words that Jefferson created.

BZ: When you told the story just a second ago about Washington having the Declaration read, I was reminded of Washington having Thomas Paine's words read at Valley Forge.

TF: No, it was as he was retreating across New Jersey in 1770.

BZ: He read The Crisis.

TF: Yes, this was the best thing Paine ever wrote: "These are times that try men's souls." He goes on to say that some people are going to fall by the wayside, but others will stay in the game.1 This was a crucial way for Washington to send a message to his troops.

BZ: And the famous line about the summer soldier. We don't have time to get into Tom Paine. He was another immensely flawed character who made an unbelievable contribution with Common Sense.

TF: You know what I feel about Common Sense? The first two thirds are the greatest political pamphlet ever written, but the last third should be called Common Nonsense, because he told the Americans they could win the war in a walk. It wasn't going to be a big struggle because the British were bankrupt. Boy, was he wrong!

BZ: Flawed though he may have been, his contribution was invaluable.

TF: Absolutely.

BZ: He brought the population into the Revolution. Before, it was really the idea of a very few landed men. They didn't have popular support until there was Common Sense. For all his flaws, he made another invaluable contribution.

TF: Absolutely. Washington took this flawed pamphlet, which incidentally convinced the Continental Congress that they could win the war in one big battle and that was going to do it. Why? Because they believed Tom Paine, who claimed that the British couldn't send a big army to America, since they were too broke. Their fleet was rotting in the harbor because they were too broke to keep it up, and so forth. What did the British do? They sent the biggest army they ever sent overseas, escorted by a fleet of four hundred ships. That's when Washington decided, we're going to change the strategy of the war.

Strategy is a crucial word if you know anything about military history. Strategy is how people think about winning the war. Washington changed the strategy in the middle of the war when he said, "From now on we will never try to win the war in one big battle. We will never put everything at risk. Instead we shall protract the war." It doesn't sound like a big deal to the average person, but I taught history at West Point and I talked to maybe 50 generals in the four years I spent up there, and I asked every one of them after we conversed about their careers, "What do you think of George Washington?"

They all said, "He was a great general."

I said, "Wait a minute, he lost more battles than he won."

And they said, "Yes, but he changed the strategy of the war and it was the winning strategy that he came up with. That's what made him a great general." That's what the grand importance of reading history is – finding what people really think about the deep undercurrents that make history work.

Drafting the Declaration

BZ: An interesting fact about the Declaration is that while it's Jefferson's writing, about 25 percent of his language was changed by the Congress. Also, there was very little in the Declaration that was original prose. We're not talking about John Steinbeck here. We're talking about a man who was in a hotel room – a boarding house – who had his books with him and had two weeks to write it. Not to criticize him, but he mostly cut and pasted other people's thoughts – aside from the indictments against the King. His skill was in putting it together in a way that will live forever, but he didn't invent much of that beautiful prose. He took it from other sources going back to the Magna Carta.

TF: That's true. He really fussed over this, though. In my book Liberty! The American Revolution I have a sample page from Jefferson's rough draft, and on this one page, he changed every other word in his revision. He struggled to get the right phrase. For instance, his first draft was, "When in the course of human events it becomes necessary for people to advance from that subordination in which they have hitherto remained ..." This was the central cause of the American Revolution. They were not going to be subordinate to the King in America anymore. When Jefferson thought about that, he said, "Wait a minute, if we start talking about subordination, that's going to make it sound like every man who has any kind of property are subordinating those without property, and those without property are going to rise up, and we'll have a wild-eyed revolution of total anarchy."

So, what did he do? He changed it to this, "When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another." You notice the word subordination has vanished. That shows the care with which Jefferson struggled to get these ideas into a nice, flowing piece of prose.

BZ: He wasn't very happy that his draft got marked up so much by the committee.

TF: You're so right. This is classic Jefferson. He was so annoyed. They threw out almost half of the Declaration and added their version, and the last half is almost totally rewritten. Jefferson was so infuriated that he had printed up quite a few copies of his original draft and he sent them around to all his friends and said, "Don't you think this is better?" That's the human frailty you have been pointing out. These guys all had frailties and flaws but they came through with the essential stuff, and that's the main thing.

Madison Switches Sides

BZ: In comparing Washington and Jefferson, I concluded that Washington's view of how the country should be organized was not theoretical, although as you pointed out, he was very well-read. He formed his views by on-the-job training – by being a general and having the war run by Congress, and by not being able to be supplied with provisions and with money because of a weak executive.

TF: That's right.

BZ: Jefferson's view was born of scholarship alone in his head. Washington's view of government was formed by doing it.

TF: That is such a great distinction, Bob. It's crucial to appreciating Washington's achievement, and the whole country that was created. He saw that the president of the country had to have some semi-independent authority – not total independence, of course. He's not a dictator and he has to work with Congress, but he has to have the right to veto things Congress does, and has to have the respect and affection of Congress so that he can lead them.

BZ: He had to persuade Madison, who was a crucial player, because Madison spent his time in both camps, if you will. Although they were in separate camps. Madison and Washington had lots of conversations about how the country should be organized, and Madison at the same time had lots of conversations with Jefferson.

TF: Those conversations came later. Jefferson arrived in 1790 after the Constitution had been ratified. He had been in Paris as the ambassador. To me, that was a big reason why Jefferson did not like the Constitution, and why he particularly disliked the presidency. He wanted "in" on it, and he wasn't involved in any way, shape or form. He went on living in his head about what government should be, whereas Washington and Madison saw what it was really like.

Madison had been a very successful Continental Congressman before he began these conversations with Washington. Then, when Jefferson arrived, since Madison had been a very close friend to Jefferson when he was governor, and there was chemistry between them, it enabled Jefferson to basically steal Madison away from Washington.

Madison became Jefferson's guy, and he wrote a series of essays in the newspaper that Jefferson founded, using the State Department figure that was working for him as the editor of The National Gazette. There were eighteen essays in which Madison ripped Washington's administration to shreds. It was just painful to see what a total change Madison had gone through such that he would do this to Washington. Washington was deeply hurt.

Before this happened, he would sign his letters to Madison, "With great affection." Believe me, not many people got those kinds of letters from George Washington. After he turned into this Jeffersonian hitman, Washington never spoke to him again.

BZ: Oh, my goodness.

The Spectacles that Saved the Country

BZ: Washington was profoundly loyal to his men – profoundly loyal – and they were to him.

Tom, you were on my show about four years ago and I asked you about the qualities that one ought to look for in selecting a presidential candidate. You said, without a moment of hesitation, "Leadership." Then you explained how Washington personified that leadership. I remember the conversation as if it were yesterday.

TF: It's still true.

BZ: It's still true. You know, Tom, sometimes I envision myself literally sitting on your knee, if you can imagine such a thing, and having you tell me stories about the founding. I'll ask you to share one of my favorite stories about Washington – it is often entitled, "The Spectacles that Saved the Country" – which was the Newburgh Revolt by the officers.

TF: That was a crucial moment. The officers revolted, lead by General Horatio Gates, who hated Washington behind the scenes. They were going to take over the country –there's no doubt about it. Washington walked out on the stage of this house that they built in the camp, called the temple. He said, "I don't think anybody should do anything until you hear from me about this." During this speech, he wanted to read a letter that a Congressman had written to him, promising him that they would do something to give these men some kind of a pension. He thought this would calm them down. When he pulled the letter out from his inside coat pocket, he realized he couldn't read it because his eyes were not as good as they used to be. He paused, put on his glasses, and said, "I hope you will forgive me for wearing glasses, gentlemen. I have grown gray in the service of our country, and now I fear I'm going blind."

It was this incredible moment of emotion in this hall.

BZ: Men wept.

TF: People started to weep. That was it. The revolt of the officers disappeared in that crucial moment. It was leadership in the most natural sense of the word. He was just being himself, but he knew he could say that to his men.

BZ: It wasn't theatrical. Washington hadn't planned that line. That was just pure Washington.

TF: Absolutely not. It was his gift as a leader. He had that instinct to know how to lead and say the right thing at various moments.

BZ: Tom, I look at the clock and it kills me. I want to find some way to turn the clock backwards. Hanging up on you is going to be the most depressing part of my day. I want to take over the station and keep you on the air for ten hours while I keep my sound engineer at gunpoint, because this is how I want to spend the rest of my life, not only the rest of today.

In the minutes we have left, tell us about your next project.

TF: My next book will probably be called An Army to Look the Enemy in the Face. This will blow away a myth that the American Revolution was won in a guerrilla war. Yes, we did have guerrillas, there's no doubt about it – particularly in the South. When Washington said he wanted an army strong enough to look the enemy in the face, he meant we would have to keep a regular army in the field. Nothing else would prevent the British from rampaging through the country and burning down anybody's house who didn't agree with them. The regular army had a moral standard that they had to maintain, to keep the war from drifting into murder and rapine. This was part of that package that Washington insisted on, and it turned out to be the key to victory.

It's great to see them practicing this idea all through the war in different ways. Believe it or not, the last battle of the Revolution didn't take place in 1781, with the Battle of Yorktown. Washington's last battle was fought in 1795 in the west.

BZ: Regretfully, we're not going to have time to talk about Washington in his last military endeavor, leading a force of 12,000 men to suppress the Whiskey Rebellion in Pennsylvania. That's a whole hour in itself because it's so important.

TF: You're right. Anyway, it's all part of Washington's ability to create a decisive moment and yet not tear apart the fabric of the Constitution.

BZ: Tom, please have a happiest of happy birthdays. Please come back and talk with us again and again.

TF: I'd love to do it – and Bob, this is a wonderful birthday present from my point of view too.

BZ: God bless you, Tom. Stay well.

TF: Thank you so much.

1 "These are times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value. Heaven knows how to put a proper price upon its goods; and it would be strange indeed if so celestial an article as FREEDOM should not be highly rated."

###

# APPENDIX I – ORIGINAL SHOWS

We Are All Libertarians Now (No guest)

Show Date: May 26, 2013

Was Ratification of the Constitution a Mistake?

Guest: Thomas Fleming

Interview Date: October 21, 2012

Repeal the Seventeenth Amendment!

Guest: Todd Zywicki

Interview Date: June 24, 2012

Is America Doomed by Voter Ignorance?

Guest: Ilya Somin

Interview Date: September 22, 2013

Property Rights of the Politically Powerful

Guest: William Maurer

Interview Date: March 25, 2012

The Second American Revolution NOW!

Guest: Don Boudreaux

Interview Date: July 31, 2011

Let Them All In

Guest: Alex Nowrasteh

Interview Date(s): Excerpts from May 5, 2013 & December 4, 2016

Recentering the Constitution on the Individual

Guest: Clark Neily III

Interview Date: April 6, 2014

Lessons in Leadership

Guest: Thomas Fleming

Interview Date: July 5, 2015

# APPENDIX II – FEATURED BOOKS

Democracy and Political Ignorance: Why Smaller Government is Smarter by Ilya Somin

Terms of Engagement: How Our Courts Should Enforce the Constitution's Promise of Limited Government by Clark M. Neily III

The Great Divide: The Conflict Between Washington and Jefferson that Defined a Nation by Thomas Fleming
ABOUT THE AUTHOR

Bob Zadek is the host of The Bob Zadek Show, a libertarian talk show broadcast live on numerous stations throughout the country, every Sunday at 8am Pacific. He talks about the issues that affect our lives on a daily basis from a purely libertarian standpoint. Bob has been practicing finance law for 50 years, is listed in "The Best Lawyers in America," and has been awarded the highest rating for Ethical Standards and Legal Ability by Peer Reviewed Martindale-Hubbell. He holds a law degree and a Master's degree in Law from NYU School of Law and is a Charter Fellow in the American College of Commercial Finance Lawyers. Bob has been retained as an expert witness in more than 25 cases dealing with finance law. As an entrepreneur, he created and now manages Lenders Funding LLC, which makes and participates in loans to small business.

He lives on his boat – the Laissez Faire – in Sausalito, California with his significant other, Anne.

CONNECT WITH BOB

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