Economic Liberty

January 22, 2016|Antitrust, Cost benefit analysis, Economic Liberty, North Carolina State Board of Dental Examiners v. FTC

Two Non-Constitutional Ways of Protecting Economic Liberty

by John O. McGinnis|

In two recent posts, I have suggested that the Fourteenth Amendment of the Constitution does protect economic liberty against the states but in a modest way. Legislation, like a state granted monopoly, that merely protects one group of people over another is illegal. But states are free to pass inefficient legislation that trenches on liberty so long as it has a bona fide police power rationale, like health and safety. The Fourteenth Amendment does not enact cost-benefit analysis.

Thus, the direct results for economic liberty of hewing to a more originalist understanding of the Fourteenth Amendment will be modest, because much legislation is inefficient, but not simply protectionist. But there are other means of achieving the goals sought by a more stringent judicial review of economic legislation, most importantly more vigorous use of the federal antitrust law and the establishment of state and local agencies that impose cost-benefit analysis on regulations.

In North Carolina State Board of Dental Examiners v. FTC, The Supreme Court recently made clear that agencies that are composed of a majority of industry representatives are subject to antitrust scrutiny, unless they are “actively supervised by the state.”

January 12, 2016|Council of Economic Advisers, Economic Liberty, Judicial Review, Railway Express Agency v. New York, United States v. Lopez, Williamson v. Lee Optical

The Rise of Judicial Review for Economic Liberty

by John O. McGinnis|

Judicial review of state intrusions on economic liberty is on the move. The Fifth, Sixth, and Ninth Circuits have held that pure economic protectionism is an illegitimate government purpose and fails even the most lenient rational basis review. In Craigmiles v. Giles, the Sixth Circuit similarly struck down restriction on casket makers’ ability to sell their wares without following the regulations applicable to funeral homes. In Merrifield v. Lockyer, the Ninth Circuit also held that economic protectionism is not a legitimate government interest. The court struck down a law that created different licensing categories for different types of exterminators, and this classification had no purpose other than helping some exterminators and harming others.

This trend represents a dramatic change from what was the norm—the routine dismissal of claims of interference with economic liberty. These dismissals were rooted in two famous (or infamous) Supreme Court decisions that decreed an extremely relaxed form of review of economic legislation that was thought to amount to no review at all.

March 14, 2014|Akhil Amar, Contract Clause, Economic Liberty, Income Tax

Economic Liberty–Part of the Constitution’s DNA

by John O. McGinnis|

Previously I praised America’s Unwritten Constitution by Akhil Amar and then offered my first reservation about the book. My second reservation is its treatment of economic liberty. Professor Amar sees the greatness of the Constitution in the unfolding of democracy and equality. But economic liberty is also in the Constitution’s DNA and yet he seems to leave it out of the American story.

I also thought unfounded one historical claim, which itself surprising, because Professor Amar is generally very reliable. In a discussion that attacked theories of interpretation that would justify reasoning striking down economic regulation, as in Lochner v. New York, he wrote: “The 1913 ratification of Federal Income Tax Amendment, one of the most notable populist events of the twentieth century, blessed redistributive economic policy by endorsing a tax that everyone understood would likely feature a progressive structure taxing the wealthy at steeper rates than the poor.” One does not have be a libertarian to wonder whether the proposition that this amendment blessed redistributive economic policy in general is an overstatement. In fact, the 16th amendment can be seen as attempt to find an stable source of revenue other than tariffs, which were not only inefficient but often regressive, rather than a general endorsement of redistribution.

In any event, regulatory powers and taxing powers are different constitutional concepts. Economists then and now almost universally see redistribution through taxation as a superior policy, because it does not lead to as much distortion and loss of innovation as does redistribution through regulation. Thus, the 16th amendment cannot be said to extinguish whatever constitutional restrictions there are on redistribution through regulation.

More generally, our Constitution protects economic freedom in many ways.

A Mirror of the 20th-Century Congress

by Joseph Postell

Wright undermined the very basis of his local popularity—the decentralized nature of the House—by supporting reforms that gave power to the party leaders.

The Graces of Flannery O'Connor

by Henry T. Edmondson III

O'Connor's correspondence is a goldmine of piercing insight and startling reflections on everything from literature to philosophy to raising peacocks.

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