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Is the Supreme Court Pro-Business, Pro-Market, or Neither?

In his much-discussed New York Times Magazine article, Jeffrey Rosen claims that the Supreme Court has become "pro-business." Eric Posner has already dissected much of the very weak evidence on which Rosen's thesis is based. I would add that Rosen's thesis is undermined by his conflation of being "pro-business" with being pro-free market, and by the Court's reluctance to provide even minimal protection for constitutional property rights and economic liberties.

I. Pro-Market vs. Pro-Business.

Rosen, like all too many other analysts conflates being "pro-business" with being pro-free market. In reality, however, business interests often favor government intervention. For example, they are happy to support regulations that hobble their competitors, provide them with subsidies, protect them from foreign competition, and so on. Politically influential corporations such as General Motors also benefit when the government condemns property that they covet and transfers it to them. As I explained in this post, libertarian and conservative public interest law firms found themselves unable to pursue a pro-market litigation strategy until they reduced their dependence on corporate support - in part precisely because business interests often support government intervention. Thus, even if Rosen is correct in claiming that the justices reflect "an emerging spirit of agreement among liberal and conservative elites about the value of free markets," that would not necessarily be a "pro-business" agenda. It benefits some businesses, but also harms the interests of others.

In reality, however, there isn't much evidence of a pro-market tilt on the Court either. Much, of course, depends on the baseline you apply. If you believe that property rights and economic liberties deserve virtually no judicial protection at all, than even the modest degree of protection they receive from the current Court will seem like too much. That said, I think the evidence suggests that the Court is very far from being pro-market. Constitutional property rights remain mired in a "second class" status relative to other individual rights - a status reaffirmed in several recent decisions. Judicial protection for other economic liberties is even weaker than that.

II. The Continuing Second Class Status of Property Rights.

In the area of property rights, the Court held in Kelo that the government can condemn virtually any property it sees fit and transfer it to another private party. Contrary to Rosen's claims that the Court is more pro-market than public opinion, in this case public opinion overwhelmingly (80% plus) favored greater protection for property rights than the Court. Although the Court majority agrees that private property can only be condemned for a "public use," it leaves the definition of "public use" almost entirely up to the discretion of the very same government authorities who wanted to condemn the property in the first place. With the possible exception of the Second Amendment, no other part of the Bill of Rights has been so completely negated by wholesale judicial deference to the government.

In recent years, the Court has also made it easier for government to severely restrict property owners rights without having its actions be declared a taking under the Fifth Amendment and thereby without having to pay the "just compensation" the Amendment requires. In the 2002 Tahoe-Sierra case (won by John Roberts as the lawyer for the government) the Court undermined much of the limited increases in protection against "regulatory takings" that it had extended to property owners in the 1980s and 90s (Richard Epstein provides a good discussion of the case's impact here). Most recently, in Wilkie v. Robbins, the Court held that, even in cases where there is a clear violation of constitutional property rights, the victims are not entitled to remedies that are routinely available for violations of other individual rights protected by the Bill of Rights.

III. The Third Class Status of Economic Liberties.

As limited as is the Court's solicitude for property rights, it extends even less protection to economic liberties. With the possible exception of Justice Thomas, all of the justices support the view that "economic" regulations require only minimal "rational basis" scrutiny that in practice leads to judicial endorsement of even the most blatant special interest manipulations that restrict individual liberty in order to benefit politically powerful interest groups. This despite growing evidence compiled by co-blogger David Bernstein and other scholars indicating that the Fourteenth Amendment was intended to provide far more than minimal protection for economic freedom. Certainly, the Court's unwillingness to provide even a modest degree of protection for economic liberties contrasts sharply with its solicitude for "noneconomic" unemurated rights, such as the right to sexual autonomy, abortion rights, and the right to marry (which is protected even in the case of death row inmates).

Rosen may be right in so far as today's Court gives property rights slightly more protection than did its predecessors between the late 1930s and the 1980s. That period, however, was an extreme anomaly in which judicial protection for property rights was far weaker than at any other time in American history. As James Ely shows in his excellent history, The Guardian of Every Other Right, judicial protection for property was much stronger during the Founding era and most of the 19th and early 20th century. And, though property rights gained some modest ground in the 1980s and 90s, Supreme Court protection for other economic freedoms hasn't advanced beyond its post-New Deal nadir.

Cornellian (mail):
Your item II might be a sort of mirror image example of your item I in that businesses are rarely at risk for the kind of confiscatory maneuver exemplified by Kelo. In other words, anti-property rights doesn't necessarily mean anti-business.
3.18.2008 3:05am
Cornellian (mail):
This despite growing evidence compiled by co-blogger David Bernstein and other scholars indicating that the Fourteenth Amendment was intended to provide far more than minimal protection for economic freedom. Certainly, the Court's unwillingness to provide even a modest degree of protection for economic liberties contrasts sharply with its solicitude for "noneconomic" unemurated rights, such as the right to sexual autonomy, abortion rights, and the right to marry (which is protected even in the case of death row inmates).

I sometimes suspect that this isn't a matter of simply liking non-economic liberties more than the economic ones. More likely it's a combination of the specter of the past (Lochner) plus a generalized but unstated feeling on the Court that they're just not capable of coping with the complex regulatory schemes that so often characterize economic regulation these days, so they tinker around the margins but shy away from wading in.
3.18.2008 3:08am
Ilya Somin:
Your item II might be a sort of mirror image example of your item I in that businesses are rarely at risk for the kind of confiscatory maneuver exemplified by Kelo.

This is to some extent true. However, small businesses often do get condemned, and several got the axe in Kelo itself. It is, however, true that it rarely happens to large, politically influential businesses.
3.18.2008 3:10am
Cornellian (mail):
As James Ely shows in his excellent history, The Guardian of Every Other Right, judicial protection for property was much stronger during the Founding era and most of the 19th and early 20th century.

Doubtful relevance today, since there was very little federal interference with property rights in those eras compared with what's happened since the New Deal. It's easy to protect property rights against non-existent intrusions.
3.18.2008 3:11am
Public_Defender (mail):
This is to some extent true. However, small businesses often do get condemned, and several got the axe in Kelo itself. It is, however, true that it rarely happens to large, politically influential businesses.

Exactly. Kelo supports the pro-big-business hypothesis. Rosen never said that SCOTUS was a friend to small business.

Your reference to Wilkie again doesn't refute the pro-big business argument because Wilkie was an individual, not a big business.

I don't see the evidence that Rosen "conflat[ed] . . . 'pro-business' with being pro-free market," but I think you have done exactly that.

The consistent theme among the cases Rosen cited was a friendliness toward management of large corporations against shareholders, government, and the people large corporations hurt.

(And your purported link to Eric Posner's rebuttal just leads back to the original NYT Magazine article.)
3.18.2008 7:21am
bla bla:
Rosen had a point, and you and Posner are missing it. After Roberts became Chief Justice, the Court started taking big business cases that it seemingly wouldn't have taken before. When it did, it basically adopted the positions advocated by the likes of the Chamber of Commerce. The best examples are Leegin (an antitrust case holding that vertical price agreements are judged under the more lenient rule of reason), KSR v. Teleflex (making it harder to get some types of patents), and Charter Communications (basically eliminating aiding and abetting liability in securities suits).

This doesn't mean that the Court's decisions were wrong or "biased." As Posner points out, they may have been right even though they could be characterized as "pro-market." But it does seem to me that the Court is more interested in business cases, and that, when it takes them, it tends to side with groups like the Chamber of Commerce. As Posner points out, the fact that these decisions are favored by big business doesn't necessarily mean they're anti-consumer . It's actually a lot more complicated than that even in the cases that I mentioned, since KSR and Leegin actually hurt some businesses.

But still, one could be excused for thinking that when Roberts--a former lawyer for big business--got to the Court, he arrived with a set of ideas for how to fix the law in ways that had been advocated by big business for years, and promptly went about achieving that objective. This doesn't mean that he's wrong--I actually tentatively agree with all three of the decisions that I mentioned above. But still, that would be an accurate characterization of the Court, I think.
3.18.2008 9:29am
Justin (mail):
I don't think this paradigm is the correct analysis, because I think "business" cases often get decided based on the Justices preferences for other values - such as originalism, executive authority, state's rights, etc.

That being said, Kelo should be irrelevant to the discussion. Kelo was a RADICAL proposition, one that had no chance of substantial success (much like Raich). If anything, the amount of votes Kelo (and Raich) received should indicate how SYMPATHETIC certain members of the court are to such ideas.

Or by analogy: Imagine the President exerting the authority to execute American citizens without a trial, and without giving a reason, based on his authority as CiC. Imagine the Supreme Court rejects such exerted authority? Does that tell us anything about the Court's views on executive authority?
3.18.2008 9:45am
Javert:

Your item II might be a sort of mirror image example of your item I in that businesses are rarely at risk for the kind of confiscatory maneuver exemplified by Kelo.

This is not true. See the Institute for Justice publication at ij.org, "publications," "Public Power, Private Gain," by D. Berliner.

In other words, anti-property rights doesn't necessarily mean anti-business.

Unless you understand the property rights are the foundation of capitalism and of business.
3.18.2008 11:06am
Adam J:
Cornellian already pointed this out, but item II is a good example of how the Court is pro-business... or at least pro big business. Questionable takings like Kelo only happen to individuals &small businesses; and are always in favor of large businesses. You appear to be conflating weak-property rights with being anti-business. Weakened property rights only harm those that are less empowered, and benefit the most politically empowered (ie big business) by giving them the ability to seize property at bargain prices.
3.18.2008 11:09am
gregh (mail):
Adam J, I'm just a few blocks from the Norwood, Oh development which could have been the case instead of Kelo. There were no bargain prices there, nor in any of the other takings I'm aware of. Usually people get about 125-150% percent of fair market value, just so that they go away with no hard feelings and without getting the lawyers involved.

The holdouts in Norwood wanted over one million each for their $50000 ratty houses.
3.18.2008 11:32am
alias:

Rosen had a point, and you and Posner are missing it. After Roberts became Chief Justice, the Court started taking big business cases that it seemingly wouldn't have taken before. When it did, it basically adopted the positions advocated by the likes of the Chamber of Commerce. The best examples are Leegin (an antitrust case holding that vertical price agreements are judged under the more lenient rule of reason), KSR v. Teleflex (making it harder to get some types of patents), and Charter Communications (basically eliminating aiding and abetting liability in securities suits).
See Matthew Franck's assessment:


Somehow, without even implying anything improper, corrupt, or even noticeably politicized about the Court's jurisprudence in recent years, Rosen manages to convey the sense that there is something malodorous about people organizing, focusing their efforts on legal affairs, hiring the best lawyers, developing successful litigation strategies and persuasive arguments, and . . . winning.
3.18.2008 12:10pm
Adam J:
gregh - some people value their houses far more than 125-150 percent of market value... should they be forced to sell just because the market undervalues their home far more then they do? Fair market value is bs... the real value of property is on how much the owner values it. You may think its a 50k ratty house... but if the owner values it more than 50k you shouldn't be able to take it from them at the price you value it at.

Also, businesses exploit their market power all the time (like when they threaten eminent domain for example)... why shouldn't individuals be allowed to as well by holding out? If they overplay their position they risk losing the sale. I have no problem with eminent domain being used for building infrastructure, when holdouts have even greater power and it affects the public interest to a significant degree, but its a disgraceful to use it every-time big businesses want to build an office park on the cheap.
3.18.2008 12:39pm
David M. Nieporent (www):
That being said, Kelo should be irrelevant to the discussion. Kelo was a RADICAL proposition, one that had no chance of substantial success (much like Raich). If anything, the amount of votes Kelo (and Raich) received should indicate how SYMPATHETIC certain members of the court are to such ideas.
No matter how many times you say it, it wasn't. The notion that "public use" does not mean "transferring private property in good condition to a private corporation that might generate tax revenues" is not "radical."
3.18.2008 1:41pm
Bravo:
Posner link is incorrect.
3.18.2008 3:50pm
Justin (mail):
DMN,

It certainly was certainly radical in relation to the precedents existing at its time. To say that Brown v. BOE of Topeka was both a radical opinion is not inconsistent with saying it was decided correctly. Now, I happen to also believe Kelo was correctly decided, but that is neither here nor there.
3.18.2008 4:50pm
Justin (mail):
And even if DMN was right, I think my point still stands, at least as something greater. You cannot look to individual instances of decisions, and say that the decision is contrary to (or proof of) a particular bias of the court, without also getting into the merits of the decision - but any legitimate debate about the merits of the decision make it impossible to determine the bias arguments.

If Kelo (or Raich, or KSR, or whatever) was not a close case, then the fact that it was decided in one particular way says nothing, by itself, about the bias of the court, other than perhaps that there was no particular grounds for granting cert.

Only when the court is explicitly resolving a circuit split (and even then, this could be questionable, as often there is one outlier Circuit that simply needs to be curtailed, as Orin Kerr tends to believe of the 9th), or if a pattern of behavior emerges, or if Justices are explicit about their biases, can we begin to entertain a useful analysis of whether a decision indicates bias or the lack of bias of the Court, or even any particular Justice.
3.18.2008 4:55pm
Roy Englert:
Rosen's article is vulnerable to many criticisms, but the ones that leapt out at me are not the ones I'm seeing discussed in the blogosphere. In a transparent effort to make the Justices seem to be reaching indefensible results, Rosen repeatedly described the facts of Supreme Court cases in ways that were either slanted or wholly inaccurate.

For example, to imply that the 8 Justices in the Riegel v. Medtronic majority (including Stevens, Souter, and Breyer) did something indefensible, he repeatedly described the issue as whether a plaintiff can sue over a "defective" medical device. A fairer statement of the issue would be whether a plaintiff can claim that a medical device was "defective" -- and ask a jury of randomly selected laypeople in state court to brand it "defective" -- when it conformed precisely to the specifications expert federal regulators imposed on manufacture of the device after an extensive review process.

Rosen described BMW v. Gore as having involved a used car sold as a new car when it had had a $300 touch-up paint job -- implying that the fault was that the manufacturer had done so little to improve the condition of the used car before fraudulently passing it off as new. In fact, the car was new, not used -- Rosen's article is simply inaccurate on this point. It sustained very minor damage in shipping. The damage was so minor that a $600 touch-up job took care of it, and Dr. Gore drove the car for 9 months without noticing any problem until he took it to "Slick Finish" and asked Mr. Slick (yes, his real name) to make it look "snazzier than normally would appear."

Statutes in most States regulate whether the manufacturer must disclose such minor repairs, and BMW would not have been required to disclose the minor repairs in most States. But Alabama had no statute, and a jury imposed $4 million in punitive damages for failure to disclose to a rich doctor the most minor of problems with his new -- not used -- BMW. State courts reduced the award to $2 million. The Supreme Court's holding -- in an opinion by Justice Stevens -- was that even the $2 million reduced award was grossly excessive and therefore violated the Due Process Clause. A debatable interpretation of the Constitution, certainly, but hardly the absurd outcome one would think from reading Rosen's article.
3.18.2008 5:35pm
JBL:
My problem with characterizations like "pro-business" or "pro-market" is the implication that business or markets are at war with something, and that therefore being pro-business is being anti-whatever.

In many contexts, pro-business is equated with being anti-citizen or anti-environment or anti-general-welfare. In some contexts it's anti-any number of other things. And although in some cases such an opposition does exist, it's hardly apparent that it's generally true.

If your position is based on facts or logic or legal requirements, is the pro- or anti- designation even appropriate?

Without being tautological, if you're pro-business, what are you anti-?
3.18.2008 9:34pm
Public_Defender (mail):

In many contexts, pro-business is equated with being anti-citizen or anti-environment or anti-general-welfare. In some contexts it's anti-any number of other things. And although in some cases such an opposition does exist, it's hardly apparent that it's generally true.

Give me a break. When a corporation goes to court to defend its "right" it to earn a profit at the expense of dumping pollution into the environment, it is anti-environment and anti-citizens-who-breath,-eat,-or-drink.

When a corporation goes to court to ask for a statute of limitations that few injured employees can reasonably meet, it is anti-employee.

I give the corporate lawyers their due--they have done an excellent and successful job of defending their clients' interests. That's a lawyer's job. But make no mistake, the interests they are protecting are the interests of the individual corporate managers who hire the lawyers. They are not do-gooders looking out for all of us.
3.19.2008 7:51am
JBL:
Public_Defender, you point to cases where such an opposition does exist. Allowing a business to pollute without internalizing the costs of that pollution is in fact anti-environment and anti-citizen.

Employer liability for employee injuries is more complex. If your talking about an injury for which the employer was directly or negligently responsible, then pro-business is anti-employee (and anti-tort generally). If you're talking about an employee who fell on the ice outside his house when he was leaving for work, or a case of employee negligence on work property, that's less clear.

Pro-business is often anti-union, but in the modern regulatory and financial world unions may not benefit more than a relatively small number of union members; it's not clear that pro-union is pro-workers generally.

There are a number of factors that contributed to the subprime crisis, but haphazard restrictions on lending probably won't address them efficiently. Well-informed and properly tailored restrictions might.

As has been pointed out above, it's entirely possible for a law to be pro-big-business and anti-small-business.

You're right, there are many cases where the interests of some particular group of corporate managers conflict with the interests of the general public. The point is that the dialog isn't well served by treating "pro-business" as a blanket political stance.
3.19.2008 11:41am
David M. Nieporent (www):
Give me a break. When a corporation goes to court to defend its "right" it to earn a profit at the expense of dumping pollution into the environment, it is anti-environment and anti-citizens-who-breath,-eat,-or-drink.
Since the environment doesn't have any interests, it's certainly not "anti-environment." Maybe it's anti-environmentalist, though. But it's pro-employee.
When a corporation goes to court to ask for a statute of limitations that few injured employees can reasonably meet, it is anti-employee.
No, it isn't. It's anti-the particular employee who filed the lawsuit. It's pro-employees who got jobs because the legal system wasn't driving up the costs of hiring people to the point where it was unprofitable to hire more people.
3.20.2008 9:53pm