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January 14, 2005

Nekkid Economic Favoritism, The Sequel

Wherein the Blog Princess throws out the other side of the argument to amaze and/or confuse the unwary...

A few days ago, the half-vast editorial staff was shocked (shocked! I tell you) to see a federal court show some deference to the Oklahoma legislature in a case involving funeral directors, caskets, and naked favoritism. Although the editorial staff never disclosed their learned opinion on the matter, they thought it only proper to follow up the sometimes Livid commentary with another view. Calling Powers v. Harris 'probably the most disastrous case for economic freedom in the last seventy years', Timothy Sandefur opines:

What that means is that government may manipulate the economy to benefit its chosen favorites, for no public reason at all—just to give out favors—even though the Fourteenth Amendment guarantees to all people the “equal protection of the laws.”

Sandefur's amicus brief in another case, which contended that nekkid economic favoritism violates the equal protection clause, was rejected by the 10th Circuit, who said in part (ahem, KJ...):

Implicit in Plaintiffs’ argument is the contention that intrastate economic protectionism, even without violating a specific constitutional provision or a valid federal statute, is an illegitimate state interest....

Which goes to my point that a crucial consideration was the Court's notion that (rightly or wrongly) it had no basis for overruling the legislature, rather than a desire to defend economic protectionism per se. Sandefur responds:

The Constitution does forbid government from regulating solely in the interest of private parties, both under the equal protection clause and under the due process clause. Unfortunately, the Tenth Circuit held that intrastate economic protectionism constitutes a legitimate state interest.” In other words, the government can exercise its coercive power to support politically successful groups for no other reason than that they are politically successful.

This is an interesting case for conservatives as it pits federalism against economic liberty, the question being who gets to regulate intrastate commerce.

Do we allow the federal courts to invoke the 14th willy-nilly to achieve the (admittedly desireable) end of protecting individual consumers? Or is this a role more properly reserved for the state legislatures?

Framed another way, I suppose one could ask, are lower prices a Constitutional right? "For the children' arguments aside, what is the federal interest here?

David Giacalone makes the counterargument here.

VC asks, you decide.

Posted by Cassandra at January 14, 2005 04:52 AM

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OK. I'm going to climb out on a limb here and just opine without reading all the background stuff. Because that's the kind of guy I am.

The rule is a simple one: following the famous "footnote four" in the New Deal era Carolene Products case, which reserved hightened scrutiny to laws that might offend fundamental interests set forth in "the first ten amendments" and the rights of "discrete and insular minorities," it became very difficult to overturn state economic regulation that does not discriminate against citizens of other states. Footnote four laid the groundwork for the Court's great deference to economic legislation that did not otherwise offend the "dormant commerce clause," which is SCOTUS slang for non-discrimination in economic regulation between citizens and non-citizens of the regulating state.

If a law or regulation does not violate a "fundamental interest" or single out a "discrete and insular" minority, then it need only be rationally related to some legitimate end identified by the legislature. Unless the world is changing around me without my knowledge, that remains the basic rule.

If the equal protection clause were applied to prevent a state government from favoring one business over another, every instance of state procurement would have constitutional implications! Or take the narrow view: if it is unconstitutional for states to require a license in order to engage in certain kinds of commercial transactions, what room does the state have to regulate the economy? Sure, some of this legislation has the effect of conferring monopoly rents on one licensee or another (lawyers, doctors, pharmacists, barbers, taxi cab drivers, liquor store owners, and so forth), but monopoly rents are part and parcel of licensing, unless you are also going to set up price controls. If you do not like the result, round up enough publicity and get the legislature to change the law, but don't call on courts to do it for you. The fact that one state regulates funeral homes differently from another state is evidence that this is possible.

Posted by: Jack at January 14, 2005 08:14 AM

Yeah, but there is a difference. The POINT is that there is no OTHER purpose other than favoritism. I can give you lots of reasons, other than favoritism (whether they be "true" or not) for licensing lawyers, cabbies etc -- they all go towards protecting consumers from dishonesty or ensurig that cabbies have insurance, resourses and training for public transport, etc.

Cassandra quoted this as though it made a hoot of difference to my argument:

"intrastate economic protectionism, even without violating a specific constitutional provision or a valid federal statute, is an illegitimate state interest.."

My argument all along has been that a law with no purpose other than to favor certain economic interest (that means - no public health argument; no economics externality argument; no public safety argument) VIOLATES THE DUE PROCESS CLAUSE OF THE 14TH AMENDMENT. In other words, the very presumption is unconstitutional in my view -- protectionism isn't the issue. The issue is what rational basis is there for the law.

We assume (under even low level scrutiny) that all laws, even bad ones, have a legitimate government purpose and rational basis.

The position you are taking is that you think the Constitution provides that a government can say, without fear of losing in court, that its "legimate purpose for this law is that we want to favor Group A, which lobbies a lot, and screw Group B, which is a disperce and difficult to organize group, and we have no other purpose - we just want to reward the people that take us to dinner a lot. That is the State's legimate purpose."

If that is the government you want, you get what you deserve. I would remind people that there are lots of economic interests protected in the Constitution that should be considered in evaluating what laws the due process clause and the 9th Amendment (remember that one -- conservatives think it means nothing/ liberals think it means anything they want it to -- I think it means something in the middle) protects us from.

Posted by: KJ at January 14, 2005 01:20 PM

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