“There is always one, more prosaic, test of a nation’s position: Are people trying to get into it; or to get out of it? I think we know the answer to that in America’s case; the United States offers more freedom and opportunity than any other in history.” — Prime Minister Tony Blair
Most constitutional scholars don’t talk about it. My uncle, Cleon Skousen, who gave week-long seminars on the Constitution, barely mentioned it. In his attack on the 1787 Constitutional Convention, the economic historian Murray Rothbard made no reference to it.
And yet, this little-known section found in Article I of the Constitution could be the key to American exceptionalism. Indeed, it explains why the United States became the economic powerhouse of the world by the late 19th century.
I spoke on this topic last week at the J. Reuben Clark Law Society in Orange, California. The title of my talk was: “The United States Common Market and the Constitution: How a Gigantic Free-Trade Zone Made America the World’s #1 Economic Superpower.”
This chart shows how America gradually dominated the world economy:
Was it the Commerce Clause?
One of the lawyers there suggested it was the Commerce Clause in Article I, Section VIII that is the secret to America’s success. The Commerce Clause gives Congress the power “to regulate Commerce with foreign nations, and among the several states, and with the Indian Tribes.”
But Section VIII of Article I of the Constitution tells Congress what it can do, and that is interfere with commerce. Unfortunately, the Commerce Clause has been a major source of ever-increasing authority by Washington bureaucrats, which alone would not necessarily make America great.
As I told the audience, you can drive a truck through Section VIII of the Constitution, which gives the Federal government virtually unlimited powers to tax, regulate, borrow money, print money and declare war. It is Section VIII that has allowed government to become bloated and almost out of control. This is one area where I wish limits were placed on Congress and the chief executive.
It was ‘The Dormant Commerce Clause’!
And that brings me to another section: Sections IX and X of Article I of the Constitution, known as the “dormant” Commerce Clause. This is the part of the Constitution that limits the role of the government, the powers denied to Congress and, in this case, the powers denied to the 50 states of the union.
Section IX states clearly, “No Tax or Duty shall be laid on Articles exported from any State.”
It adds, “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.”
Then in Section X, the Constitution states, “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.”
John Marshall, Chief Justice from 1801 to 1835, made it clear what this section meant. In 1824, in the case Gibbons v. Ogden, he maintained that the “sole question” before the Supreme Court was: “Can a State regulate commerce… among the States, while Congress is regulating it?” He answered in the negative. No, it can’t.
A Gigantic Free-Trade Zone in America
In essence, Sections IX and X created a gigantic free-trade “common market” among the 50 states, from sea to shining sea. No state can stop you at the state border, impose tariffs and quotas on goods being brought into the state (except to check for diseases) or leaving the state. You don’t need a work permit when you move to a new state (except in the case of licensing), and you don’t need permission to invest in one state or another.
During the past 250 years, no other country was able to create such a massive free-trade zone like the United States, taking full advantage of our spectacular natural resources, rivers, mountains and a “melting pot” of immigrants.
America was one of the first countries to adopt Adam Smith’s free-trade model. Benjamin Franklin, who was friends with Adam Smith, supported Smith’s criticism of protectionist measures. “No country was ever ruined by trade,” Franklin declared.
Europe has tried to imitate U.S. policy with its “United States of Europe,” the European Union, which now consists of 27 countries that have a common market in goods, capital, currency (the euro) and employment (no work permits).
Americans Endorse Domestic Free Trade
Constitutional lawyer Norman Williams concludes, “The United States Constitution commits the nation to a liberal, free-trade regime among the states. That commitment is embodied in several constitutional provisions that limit the authority of the states to restrict interstate trade or commerce, most notably the ‘dormant Commerce Clause.’ As the Supreme Court has observed, these provisions effectively create a common market trading system for the nation.”
He adds, “Beginning as early as the middle of the nineteenth century, the Court actively rooted out and invalidated state laws that sought to discourage the sale of out-of-state goods or services so as to favor local economic interests. Since then, numerous ‘discriminatory’ measures have been struck down by the Court. Indeed, as others have noted, this antipathy to local protectionism has been a hallmark of the Court’s Commerce Clause jurisprudence.”
The Constitution Saved the Day during the 2020 Lockdown
Sections IX and X saved us during the 2020 pandemic/lockdown. Notice that the borders between the United States and Canada/Mexico, as well as other countries, were closed. Most international flights ended. But not domestic flights between the states. You could still drive and fly within the 50 states. A few states tried to impose travel restrictions, but they didn’t last. In almost every case, you were never stopped by the state police when driving from California to Nevada, or from Georgia to Florida. We can thank the Constitution for that.
Four Other Factors that Made America #1
In my talk last week, I mentioned four other factors that contributed to America’s dominance into the 20th and 21st centuries, in addition to the “dormant commerce clause”:
- Constitutional support for patents and copyrights
- A strong dollar. The dollar has become the world’s currency
- Free trade (declining tariffs)
- Open immigration (until recently)
Put together, the United States has become the world’s #1 superpower. We can only hope it remains so.
What George Washington and Adam Smith Have in Common
Yesterday, Feb. 22, was George Washington’s real birthday. Here is a great quote from his Inaugural Address in 1789: “No people can be bound to acknowledge and adore the invisible hand which conducts the affairs of men more than those of the United States. Every step by which they have advanced to the character of an independent nation seems to have been distinguished by some providential agency.”
Here, our first president makes reference to the “invisible hand” which Adam Smith, the founder of modern free-market capitalism, made famous in his book “The Wealth of Nations.”
I tell the inspiring story of how Adam Smith and his “invisible hand” doctrine became the hero and protagonist of my book, “The Making of Modern Economics.” Every economist, from Karl Marx to John Maynard Keynes to Milton Friedman, is judged by whether they supported Adam Smith’s model or opposed it. It even has a good ending! See my story here.
The publisher Routledge charges $55 for my book, but I charge only $35 at www.skousenbooks.com. And I sign the book and pay the postage if mailed inside the United States.
This year is the 300th anniversary of Adam Smith’s birth (1723). Join me in celebrating this great hero by ordering your copy today.
EconoSummit, March 11-12, Ahern Hotel, Las Vegas: Join me for this two-day financial conference, sponsored by the Investment Club of America. The cost is only $199 per person. I’ll be speaking on “American Exceptionalism on Wall Street: My Most Successful Technique to Make Money in the New Roaring Twenties.” Join John Fund, senior writer for National Review, who will speak on “Election Geopolitics: Hard Lessons I’ve Learned After 50 Years at the Ballot Box,” and Floyd Brown, publisher of the Western Journal and author of the new book “CounterPunch.” Sean Flynn, a top economics textbook writer, will speak on “How Environmental Extremists Threaten Prosperity and Your Investments.” And Chuck Muth will talk about “Nevada Politics: The Good, the Bad and the Ugly.” Book your Ahern hotel room for only $159 a night. Call 1-725-414-4800, ext. 2, and use the code HighMark to get the discount. The NCAA tournament (“March Madness”) will take place in Vegas during our conference, so expect hotel rates to surge to over $300 a night. For more details, go to www.econosummit.com.
Investment U, 25th Anniversary Conference, The Ponte Vedra Inn & Club — Ponte Vedra Beach, Florida, March 26-29: My topic will be “My Most Successful Money-Making Technique: A Report Card After 25 Years at IU.” Other speakers include Alex Green, Marc Lichenfeld, Karim Rahamtulla and Marian Tupy, the author of “SuperAbundance.” For more information, call Opportunity Travel at 800-926-6575, or go to www.opportunity-travel.com.
Tulsi Gabbard to Address FreedomFest
FreedomFest, July 12-15, Memphis, Tennessee: If you’ve never been to Memphis, you are in for a treat. It is the birthplace of rock & roll, and the location of Elvis’s Graceland, the Martin Luther King Civil Rights Museum, Beale Street and the headquarters of FedEx, among other highlights.
We Have a New Speaker!
Tulsi Gabbard, a former Congresswoman and now a Fox News paid contributor, will tell us why she has left the Democratic Party, and why she is optimistic about the future of America.
New Debate! I’ll be moderating a special panel/debate on “Do Political Labels Offer More Heat than Light?” with Steve Moore, Richard Rahn and Hyrum Lewis, co-author of the new book “The Myth of Left and Right: How the Political Spectrum Misleads and Harms America.”
For more information on all the new speakers and topics, go to www.freedomfest.com.
Special Discount for Investor Cafe Subscribers Only: An Additional $50 Off!
Make your plans to attend THE liberty conference of the year. We are offering an extra $50 in addition to the “early bird” discount for my subscribers! To register and take advantage of this discount, go to www.freedomfest.com, and use the code EAGLE50. Or call Hayley at 1-855-850-3733, ext. 201. See you in Memphis!
A FIRST TIME OFFER! Many FreedomFest fans have asked if we offer a special “Super FreedomFest Ticket” that includes all luncheons, breakfasts, the Saturday night banquet, front-row seating and special private meetings with top speakers. Yes, for the first time, we are offering a special “all in” ticket! For details, go to https://www.freedomfest.com/freedomfest-fam/ or call Hayley at 1-855-850-3733, ext. 201 for details.
Good investing, AEIOU,
Mark Skousen, America’s Economist
You Nailed it!
Governor DeSantis, Our Next President
In case you didn’t know, Governor Ron DeSantis is running for president in 2024. He’s just the kind of leader we need to create another “Roaring Twenties.” He’s pro-business, pro-investor and pro-freedom.
I see he has a new book coming out next week: “The Courage to be Free: Florida’s Blueprint for America’s Revival.” In part, it tells his personal story, which is remarkable and praise-worthy. You can buy it here.
The New York Post has recently run excerpts from his new book on their website.
A little over a year ago, my wife and I met Gov. DeSantis in California. In his speech, he made a point of contrasting his state with California. He noted that Florida is ranked the “freest state in the union,” while California is ranked #48 and New York #50, according to Cato Institute’s “Economic and Personal Freedom Index.” Florida has the lowest tax burden, and California has one of the highest.
According to the governor, in 2020, 99% of votes in Florida were reported on the actual day of the election, compared to taking a month to do so in California. In Florida, IDs are required to vote, and ballot harvesting (collecting ballots for other voters) is forbidden.
The governor is so popular that, for the first time in years, there are now more registered Republicans than Democrats in the state. He won re-election by a landslide of 1.5 million votes in a state that is known for its slim margins.
Gov. DeSantis should be the next president of the United States. The only person keeping him from the Republican nomination is Trump, but the former president will be 78 in 2024, and DeSantis will be only 48 years old. It’s time for new blood.