Public choice theory and occupational licensing.

• Author: Larkin, Paul J., Jr.
• Position: Continuation of III. The Traditional Constitutional Analysis of Social and Economic Legislation D. The Backlash Against the Backlash Against Lochner into IV. An Alternative Approach to Judicial Review of Social and Economic Legislation A. Treating Political Corruption as an Illegitimate State Interest 2. Treating Rent Creation and Rent Extraction a

1. The Rehabilitation of Lochner

   Some contemporary scholars have urged the Supreme Court to reconsider its New Deal era precedents, including ones upholding occupational licensing restrictions, on the ground that "property" rights are no less important than "liberty" rights. (214) In their opinion, the prevailing view of Lochner grossly overstates the adverse effect of that decision. Progressives won the battle over intrusive judicial review of social and economic legislation, those academics concede, (215) and the victors always write the history. But the story they tell is inaccurate because Lochner was hardly the legislative kryptonite it has been made out to be. The Supreme Court of that era upheld more laws than it struck down, and some of those that the Court held unconstitutional were classic examples of special interest legislation. (216) The Court also did not throw in with the interests of large businesses. For example, the poor were the principal beneficiaries of decisions that held entry restrictions invalid. (217)

   These scholars maintain that the Supreme Court mistakenly abandoned the field of economic regulation to the political process in the 1930s while strictly scrutinizing any government effort to restrict civil or political liberties. "While few Americans will discount the importance of the so-called civil liberties, the reality is that economic liberties are the lubricant of a market economy." (218) Each category of liberties should receive the same respect as the other. In fact, the current state of the law is not only mistaken, but also undeniably elitist, because the "average person," the people who form the majority of the nation, would enthusiastically trade off some personal freedoms for greater economic opportunity. (219)

   So far, the Supreme Court has been unwilling to fundamentally re-examine its New Deal era economic regulation precedents and apply the same degree of scrutiny to economic legislation that it has used to assess restrictions on certain personal freedoms. Litigants, of course, could try to resurrect substantive due process principles. If they do, they likely would argue along the following lines.

2. A New Old Fundamental Right to Property

   A changed economic theory. Critics of New Deal jurisprudence would start out by noting that the economic background to the New Deal era decisions has changed, justifying a reexamination of those rulings. The argument would be that the nation has witnessed a fundamental shift in how economic policy and law should treat competition. The Depression caused a lack of public confidence in the efficacy of free markets and a desire for government intervention. (220) New Deal economics sought to protect rivals against the "brutal ethos" and "anarchical" effects of "excess" or "ruinous competition" through government regulation of price, output, and factors of production. (221) Part of the rationale for government intervention was the fear that price wars would add to the greatest unemployment rate in American history, but another component was the belief that central planning could rationally avoid the faults of a laissez-faire free market economic system. (222)

   The demise of Marxist economies beginning in 1989 shows that central planning cannot produce economic growth. (223) "Today, claims of ruinous competition usually are met with a snicker and the observation that ruinous competition is nothing more than competition." (224) Contemporary national competition policy has changed direction by one hundred-eighty degrees. American law now strongly demands that competition between rivals be robust and, with limited exceptions, prohibits state actions that would foreclose rivalry or lead to the cartelization of an industry. (225) The difference in how the law treats competition is due to a fundamental shift, universally acknowledged, in the focus of the federal antitrust laws away from protecting the interests of rivals to advancing the interests of consumers. (226) Those changes, the argument concludes, justify reconsideration of precedents grounded in an economic policy that has since been abandoned as flawed and ineffective.

   A changed approach to judicial review. In 1908 Learned Hand wrote an article in the Harvard Law Review advancing the two standard criticisms of the Lochner decision. The first one was that a legislature should decide what rules of law advance the public "welfare" because the courts cannot make that decision except by defining that term "arbitrarily and unreasonably." (227) Hand's other argument was that "there is an obvious and insuperable impropriety" in "questioning] the integrity of a coordinate branch of the government" regarding what is in the public interest and whether particular legislation promotes that goal. (228) Those arguments seem quaint today.

   Start with the First Amendment commercial speech doctrine. In 1976, in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., (229) the Supreme Court overruled its 1942 ruling in Valentine v. Chrestensen (230) that purely commercial speech is not entitled to First Amendment protection. Since then, the Supreme Court has regularly analyzed whether state legislation advances the public welfare or is designed to benefit only a certain segment of the public. For example, the Court has repeatedly second-guessed the legislative decision that the public is better off by remaining ignorant of information, such as lower prices offered by competitors, because "[t]he First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good." (231) Generally speaking, a court must determine whether a statute directly and reasonably advances a substantial governmental interest and whether the law is drafted to achieve that interest, which demands that the legislative ends and means "fit" together, a burden that the government must carry. (232)

   As for alleged "impropriety" of questioning a legislature's motives: That concern went out the window in 1976 when the Supreme Court held in Washington v. Davis (233) that a court must find that a legislature was motivated by racial bias before the court could hold a facially neutral law a violation of equal protection. (234) It is now settled law that a court not simply may, but must inquire into a legislature's intent in a host of circumstances: whether a state law discriminates against interstate commerce or out-of-state economic participants, in violation of the Dormant Commerce Clause; (235) whether a statutory penalty imposes a punishment without a trial, in violation of the Due Process Clause; (236) whether a legislature was motivated by race- or sex-based discrimination, in violation of the Fourteenth Amendment Equal Protection Clause (237) or the Fifteenth Amendment; (238) whether a state tax is motivated by an improper censorial purpose, in violation of the Free Speech Clause; (239) whether a state law challenged under the Establishment Clause has a secular purpose for its enactment; (240) and whether a facially neutral state law is in fact is thinly veiled assault on a disfavored sectarian creed, in violation of the Free Exercise Clause. (241)

   The common law and property. The best way to start any reexamination of the value of property rights under our Constitution is to begin with the English common law. (242) For example, given that thirty-eight of the sixty-three articles in Magna Carta protected feudal property rights, it can safely be said that the Great Charter was an important recognition of the need to protect those interests. One scholar has surmised that, given the "overwhelming number" of articles protecting feudal property rights, "the protection of property is probably the outstanding feature of Magna Carta" (243) and could be said to be "the raison d'etre for the establishment of the rule of law in the Great Charter." (244) If "[t]he charter of 'liberties' is thus in large measure a charter of 'properties,'" (245) it is fair to say that "property rights constitute the better part of freedom as an end of the rule of law." (246)

   Common law scholars supported that conclusion. Coke believed that the grant of a monopoly to a business was contrary to "the law of the land" and void because the monopoly denied a person the opportunity to pursue a profession as part of his life. (247) Blackstone found that, under English law and custom, "every man might use what trade he pleased." (248) John Locke wrote that the men created civil society to protect "property" along with life and liberty. (249) Adam Smith believed that the right to pursue a lawful occupation was an essential element of the right to "property." (250) "The seventeenth-century English constitutional maxim making liberty dependent on security in private rights to property may be the most...