Archive | Economic LIberties

Is It Rational to Bar Troopers from Practicing Law?

Some New Jersey state troopers got law degrees with the help of a state-sponsored loan repayment program.  Then sought to practice law on the side — doing wills, real estate closings, etc.  Then the State Ethics Commission for the Department of Law and Public Safety decided that it was unethical for troopers to engage in the private practice of law.  The troopers sued, alleging (among other things) that the prohibition violated their rights under the 14th Amendment.  Alas, their case did not get far, as the U.S. Court of Appeals upheld the restriction, finding that the state had a rational basis for concluding the rule would prevent some potential conflicts of interest.

(Hat tip: John Steele) [...]

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Thanks — and Come Visit!

Thank you to The Volokh Conspiracy for allowing me to guest blog this week about economic liberty and the law. Economic freedom is one of the most crucial of human rights, and it is a shame that government violates this right in so many ways today, and with little serious opposition by the courts that are supposed to protect our rights.

Check out the new Right to Earn A Living book page, and if you haven’t joined our Facebook page, please do so today!

I hope readers will check out PLF Liberty Blog for more updates on the cases I and my Pacific Legal Foundation colleagues are litigating. Also, in the coming weeks I’ll be speaking at events across the country, and would love to meet any VC readers or PLF supporters. I’ll be speaking in Boston on Tuesday, Hartford on Wednesday, Portland and Brewer, Maine, on Thursday, and again in Boston on Friday. Check out the book page for a full schedule of future talks in those and other cities across the country.

Please also drop by my personal blog, Freespace, and Panda’s Thumb, where I sometimes write about creationsim/evolution issues. [...]

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The Poetry of Economic Liberty

There’s a surprising amount of great poetry about economic liberty; perhaps the most famous is Shylock’s comment in The Merchant of Venice, when Antonio recommends that the state confiscate Shylock’s property: “Nay, take my life and all; pardon not that: / You take my house when you do take the prop / That doth sustain my house; you take my life / When you do take the means whereby I live.” The Supreme Court quoted this passage in Adams v. Tanner, 244 U.S. 590 (1917), when it struck down a state law that outlawed employment agencies. While the government could certainly regulate such agencies to protect the public and to police against fraud or force, it could not “justify destruction of one’s right to follow a distinctly useful calling in an upright way.”

Other poets have celebrated economic dynamism; there’s Whitman’s evocative praise of American industry, and Sandburg’s ode to muscular Chicago; the New Deal’s insane restrictions on economic freedom led to Ogden Nash’s famous parody “One From One Leaves Two,” and also inspired a poem about the Shechter Poultry case by Mrs. Shechter herself.

But I’ve always most enjoyed Maya Angelou’s poem “Times Square Shoeshine Composition.” Although Angelou’s shoeshiner speaks ironically of capitalism, he is actually a prime example of the opportunity that free markets offer to people in his position, and Angelou’s warm celebration of his boastful pride in his work harmonizes remarkably well with Whitman’s mechanics and artificers. He really is a capitalist; an entrepreneur who has achieved a degree of self-reliance and pride that was, of course, totally denied to his ancestors. When he insists on the quarter and a dime instead of just a quarter, he brings to mind Frederick Douglass, who described in The Life And Times how he felt upon being paid [...]

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Racial Impacts and Business Regulations

Intrusive business regulations have a disproportionately negative impact on the poor and members of minority groups, who lack the political influence that whereby wealthy corporations and politically well-connected people are able to obtain special government favors. Nobody has done better scholarship on this point than Volokh Conspiracy blogger David Bernstein. The historical examples of the abuse of licensing laws and other regulations to oppress racial minorities are legion, and depressing. But they aren’t surprising. The lesson of public choice theory is that when government can redistribute wealth or opportunities, that power will fall into the hands of politically well-connected groups, who use it to their own advantage at the expense of less favored groups.

The treatment of the Chinese in California is a distressing example. At the California Constitutional Convention of 1878 — organized by the anti-Chinese Workingmen’s Party — many delegates spoke of their readiness to exploit government’s regulatory powers to keep out the Chinese workers who competed with white labor. As one delegate said, the Chinese laborer was [...]

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Two or Three Myths About Substantive Due Process

When talking about “substantive due process,” as I’ve been doing, one must address a number of myths about that theory that, sadly, are so common that many law students are never even taught what the theory even means.

I.

Here is a good example: “the Supreme Court has never in its entire history tried to derive [substantive due process] from the text of the Constitution.” Nelson Lund & David B. Kopel, Unraveling Judicial Restraint: Guns, Abortion, and the Faux Conservatism of J. Harvie Wilkinson III, 25 J.L. & Pol’y 1, 3 (2009). Now, whether one accepts or rejects the idea of “substantive due process,” this claim is just false. The Supreme Court had repeatedly explained how substantive protections arise from the Constitution’s text. [...]

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Does The Right to Earn A Living Apply to Immigrants?

A commenter asked whether illegal immigrants have the right to earn a living. Obviously they do, as all human beings do, although that has nothing to do with whether they may violate U.S. immigration laws. But it does bring to mind the many ways that government has used immigration restrictions to give economic favors to favored constituents.

Probably the most famous case is Truax v. Raich, a 1915 decision in which the Supreme Court struck down an Arizona law that capped the number of (legal) immigrants a business could employ. That law existed solely to “protect the jobs” of — i.e., bar fair competition with — natives. The state certainly had the authority to regulate industry to protect the public, the Court said, “[b]ut this admitted authority…does not go so far as to make it possible for the State to deny to lawful inhabitants, because of their race or nationality, the ordinary means of earning a livelihood…. [T]he right to work for a living in the common occupations of the community is of the very essence of the personal freedom and opportunity that it was the purpose of the [Fourteenth] Amendment to secure. If this could be refused solely upon the ground of race or nationality, the prohibition of the denial to any person of the equal protection of the laws would be a barren form of words.”

But a recent decision by the Ninth Circuit is more troubling. In the little-noticed case of Sagana v. Tenorio, that court upheld a law of the Commonwealth of Northern Mariana Islands which bars the employment of non-resident aliens in certain jobs, and imposes very severe restrictions on their employment in other jobs. This law exists solely to bar competition in the labor market, not to protect the general public. Yet, the court [...]

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Laws Against Low Prices

One of the most common ways government violates the right to make a living is through rules that prohibit businesses from charging low prices. Probably the most famous case about this issue is Nebbia v. New York, in which the state of New York, in the depths if the Great Depression, made it illegal to sell milk for low prices. The Supreme Court upheld this law in a decision that basically invented the “rational basis” test.

But there are many similar laws on the books in most cities and states today — laws that do not protect the public, but only protect established companies against competition. Tampa, Florida, for example, requires limo companies to charge at least $20 per hour. Why? Well, some years ago, I asked that question, and the Hillsborough County Public Transportation Commission answered that the restriction exists to “create a balance between the different transportation ‘markets’” so that taxis and limos would “not directly compet[e] against each other. This way, both manage to survive in their respective market area and the ‘balance’ is maintained.”

Balance? Why should the government impose an artificial “balance” in the market if it doesn’t reflect what consumers prefer? What authority does government have to force people to pay more for limo rides so as to protect the taxi companies from having to improve their services? Only if you think government exists to promote the interests of taxi drivers who can’t compete fairly, would you think the government should block mature adults from deciding for themselves what transportation choices to make. Such rules do not even arguably protect the public from fraud or violence or anything; they only exploit government’s coercive power to protect one private interest group against competition from another. That is arbitrariness — when the government decides to use [...]

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Motor Dealers And Protectionism

Commenter rpt asks “Have you studied motor vehicle dealer restrictions?” Indeed, I have (and discuss them in chapter 7 of my book). Restrictions on auto dealerships are often explicitly designed to protect established businesses against economic competition.

Take, for example, Illinois. That state’s Motor Vehicle Franchise Act establishes a government committee that decides whether to allow new car dealerships to open, and gives them a long list of criteria to consider in making that decision. These criteria are explicitly anti-competitive: factor 10 requires the board to consider “the effect of an additional franchise…upon the existing motor vehicle dealers [selling] the same [ types of cars] in the relevant market area.” Factor 2 requires the bureaucrats to consider “the retail sales and service business transacted by the objecting motor vehicle dealer or dealers…during the 5 year period immediately preceding.” Factors 3 and 4 require the board to weigh “the investment necessarily made and obligations incurred by the objecting motor vehicle dealer” and “the permanency of the investment of the objecting motor vehicle dealer.” Factor 7 explicitly declares that “good cause” for the board to allow a new business “shall not be shown solely by a desire for further market penetration” — in other words, the desire of a car company to succeed in the market is not enough reason to let it open a new dealership.

This law was challenged in the Illinois Supreme Court in 2006. As I wrote in Pacific Legal Foundation’s friend of the court brief, this law was simply a “naked preference,” by which established businesses were exploiting government power, not to protect the general public, but to insulate themselves against competition. “[W]hen government limits one person’s liberty merely to give a benefit to another person, then the government has exceeded its authority [...]

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Is Protectionism A Legitimate State Interest?

Thank you to Prof. Volokh for the opportunity to discuss my book The Right To Earn A Living. One of the major themes of my book is that under today’s legal standards, courts refuse to participate in one of the mist crucial tasks of a free government: to prevent the exploitation if government’s coercive powers by self-interested lobbying groups. As originally understood, the “due process of law” clause barred the government from using its powers in fundamentally arbitrary ways — meaning, in ways that only promoted the interests of powerful factions, without a serious connection to the true public welfare.

In The Federalist, Madison makes it clear that while the first task of government is to protect the people, equally important is to “oblige [the government] to control itself” — that is, to prevent the “mischiefs of faction,” which means, the tendency of private interest groups to wield government power to advance their private interests, instead of “the permanent and aggregate interest of the community.” Courts have an important role to play in preventing thus evil, but thanks to the “rational basis test” that courts use today when addressing cases about private property rights and the freedom of economic choice, that role is going unfilled. Instead, courts simply look the other way, or cooperate in abuses by rationalizing unjust restrictions on economic freedom.

Consider for example, the case of Michael Munie. Munie is a businessman in St. Louis, Missouri, where he runs ABC Quality Moving. Running a moving company in Missouri ought to be a simple matter of owning a truck and painting “Moving Company” on the side of it. But in Missouri, if you want to run a moving business, you first have to get permission from all the existing moving companies.

When you file an application for the [...]

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How Unions Exploit Anti-Competitive, Private Interest Law-Making

Occupational licensing laws aren’t the only realm in which government deprives us of the freedom of economic choice simply to serve private interest groups. Consider the United Food and Commercial Workers’ war on non-union grocery stores like Wal-Mart.

In many communities, union supporters persuade local officials to use zoning restrictions to bar the opening of Wal-Mart Supercenters or other stores, often using rhetoric about preserving the “local feeing” of “small towns.” In reality, these laws exist to force you to pay more for groceries, not to advance the public good, but to promote the interests of unions that can’t compete fairly in the labor market. This special-interest legislation, however, is allowed by courts that simply look the other way under the “rational basis” test.

Take, for example, the case of Hernandez v. Hanford. That case didn’t involve grocery stores, but furniture stores, yet the principle is the same. The city allowed furniture sales only in one specific place — thus forcing people to travel farther or pay more for furniture they needed. When one store tried to sell furniture outside this region, the established furniture stores complained(not consumers, mind you, who were happy to have more choices for furniture). The city had actually carved out a special exception in its law for Target, because they didn’t want to lose that store. But other stores were barred from selling furniture, solely to serve the interests of established stores. Still, the California Supreme Court upheld this restriction, writing

language [in some precedents] could be interpreted to suggest that a zoning ordinance is valid only when the ordinance has merely an “indirect impact” on economic competition, and never when the regulation of economic competition is a direct and intended effect of the ordinance…. [This] would be inaccurate…. [M]ore recent decisions have upheld zoning

[...]
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Coffin Cartel Knocks Casket-Making Monks

The Benedictine monks at St. Joseph Abbey in Covington, Louisiana, saw much of their timber felled by Hurricane Katrina.  To make the best of the situation, they began turning their downed trees into hand-crafted caskets.  Business was brisk, prompting complaints from funeral homes and an investigation by the Louisiana State Board of Embalmers and Funeral Directors.  In Louisiana, as in some other states, only a licensed “funeral parlor” may sell caskets or other “funeral merchandise.”   Funeral caskets are high-margin items, so local funeral parlors don’t like the competition, and in-state parlors largely control the state regulatory board.  The WSJ reports:

This past March, the Louisiana State Board of Embalmers and Funeral Directors subpoenaed two abbey officials to a hearing. If found guilty of illegal casket sales, each official would face fines of between $500 and $2,500 per violation, the board warned. The hearing, scheduled for mid-August, was cancelled due to a tropical storm.

By then, the monks had already prepared their own federal lawsuit, citing Louisiana’s “casket cartel.”

The state funeral board has nine members, eight of whom are funeral industry professionals. The board “really has it in for the abbey,” complains Jeff Rowes, senior attorney at The Institute for Justice, an Arlington, Va., libertarian public-interest law firm representing the monks. The law, he says, “is an unconstitutional invasion of the right to earn an honest living.”

There’s more on the lawsuit at the Institute for Justice website here. [...]

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A Funny Thing About “Substantive Due Process”

In his Stop the Beach opinion, Justice Scalia writes, “The first problem with using Substantive Due Process to do the work of the Takings Clause is that we have held it cannot be done.”

But hold on! The Takings Clause does not apply to the states. The Fourteenth Amendment’s Due Process Clause applies to the states. The Supreme Court has held that the rights protected by the Clause include the rights delineated by the Fifth Amendment via “incorporation.”

You can see where this is going. Enforcing the Fifth Amendment’s Takings Clause against the states via the Due Process Clause is literally an exercise in protecting a substantive right through that clause, and therefore is “substantive due process.”

I understand, of course, that in modern constitutional discourse we distinguish between “substantive due process” and the “incorporation doctrine.” But I think this distinction is incoherent, an illogical historical artifact.

Basically, the post-New Deal Justices who wanted to protect some or all of the rights contained in the Bill of Rights against the states needed to blunt criticism that they were emulating their discredited pre-New Deal predecessors. The pre-New Deal Justices had also protected some of those rights–freedom of speech speech, Takings, etc.–via the Due Process Clause, often with no reference to the Bill of Rights. So the post-New Deal Justices and their defenders asserted that the liberty of contract cases and other unenumerated rights cases involved illegitimate “substantive due process,” while cases “incorporating” the rights found in the Bill of Rights against the states did not.

Grounding the Due Process Clause’s substantive protections in the Bill of Rights and avoiding unenumerated rights may constrain judicial activism, but it’s still a quite literal exercise in “substantive due process.” And given precedent going back to the 1870s implicitly acknowledging that the rights protected by [...]

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The Bernardine Dohrn of the early 20th century: The terrorist professor at U of Texas law school

My DU colleague Thomas Russell, who used to teach at the University of Texas Law school, has a written a paper, available on SSRN, which urges the University of Texas Law School to rename Simkins Hall, a law and graduate male student dormitory named for William Stewart Simkins. Simkins taught equity, contracts, procedure, and related topics at UT for three decades in the early 20th century. He was also a founder of the Ku Klux Klan in Florida, and every year at UT he gave a formal speech extolling the Klan.

Most of Russell’s paper concentrates on Simkins’ career at UT, as well as the 1954 decision (five weeks after Brown v. Board was announced) to name the dormitory after him. I was curious to learn more about Simkins had actually done with the Florida Klan, so I read Michael Newtown’s book The Invisible Empire: The Ku Klux Klan in Florida. [...]

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Debate on constitutionality of Obamacare

Held on April 28 at the University of Colorado law school, under the sponsorship of the American Civil Liberties Union of Colorado. Arguing in favor of constitutionality was Jean Dubofsky, former Justice of the Colorado Supreme Court. Arguing the other side was me. The video is here. (Video and audio are often out of sync by several seconds.) The format was Kopel presentation, Dubofsky presentation, Kopel rebuttal, Dubofsky rebuttal, and then questions from the audience. Pursuant to the framing of the question, both of us devoted substantial attention to whether Colorado Attorney General John Suthers made the right decision in joining the 20-state coalition lawsuit against the new law. The pro/con presentations take about an hour, and the full program is 1 hour and 36 minutes. [...]

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Is the tax power infinite?

One source of the impending constitutional challenge to the Obamacare mandate is that exceeds the enumerated powers granted to Congress under Article I, section 8. For example, that the people’s grant to power to Congress to regulate commerce  among the several states does not include the power to compel people to engage in commerce. Jack Balkin, writing in the New England Journal of Medicine, has two responses: 1. Yes it does, because of Wickard and Raich, since people without insurance will eventually get sick and then buy health services; and allowing these people to buy health services outside the congressional system would undermine the congressional regulation. 2. The mandate is structured as a tax.

For the moment, let’s put aside the question of whether the Obamacare tax is an Article I tax, or a 16th Amendment income tax. Does Congress have the infinite power to control people’s behavior (such as by ordering them to engage in commercial transactions) via the tax power?  I suggest not. When the Bill of Rights was being debated in front of Congress, the skeptical Rep. Theodore Sedgwick of Massachusetts asked if there should also be an enumeration that “declared that a man should have a right to wear his hat if he pleased; that he might get up when he pleased, and go to bed when he thought proper.” 1 Annals of Congress 759-60 (Aug. 15, 1789). Sedgewick’s point was that national laws about bedtimes and hat-wearing were self-evidently beyond the authority of Congress.

However, if the tax power means that Congress can order citizens to buy something they don’t want to buy, why does Congress not have the power to assess taxes on people who get too little sleep, or too much sleep, and thereby harm their own health and the public [...]

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