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Is There a Right to Earn a Living?

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The Right to Earn a Living: Economic Freedom and the Law
by Timothy Sandefur (Washington, D.C.: Cato Institute, 2010)

Is there a right to earn a living? Most Americans would answer, “Of course there is, but …” Following that “but” you would get a long list of exceptions and qualifications that whittle away at the right, such as “but the individual must have a license as required by law,” “but only if he charges reasonable prices for his work or goods,” or “but he is subject to regulations that protect the public interest.” Pile on enough of those restrictions and the right dies the death of a thousand cuts.

Attorney Timothy Sandefur’s book The Right to Earn a Living: Economic Freedom and the Law demonstrates that the right to earn a living is succumbing to exactly that fate. The constant encroachments of statutes, regulations, and court decisions have drastically altered the legal landscape to the point where it is more accurate to say that we may ask for permission to work and engage in commerce than that we have a right to do so.

The book is dedicated to two men who fought against that trend — the 19th-century Supreme Court justice Stephen Field and the late law professor Bernard Siegan — and it sets forth the many fronts on which “progressives” have been and are waging war against economic liberty. The problem is, Sandefur explains, those people really do not think that there are any rights to economic freedom. They demand a society in which presumably benevolent experts decide what people may and may not do. Freedom would get in the way of their plans for controlling society and achieving their visions, so we must have an extensive system of controls, backed up with fines and punishments for anyone with the temerity to defy the authorities.

Sandefur’s philosophy puts him in direct and heated conflict with most contemporary legal scholars. “These academics,” he writes, “have forged a consensus view that economic liberty was, in fact, concocted by ideologically biased 19th-century judges who acted as a de facto arm of the capital owning class.” That notion is widely accepted by most law professors and judges; they believe that the nation’s turn away from laissez-faire, property rights, and freedom of contract was all for the good. Reading Sandefur’s book would be quite a shock for them, as he mounts a vigorous defense of the above and an assault on the morality and utility of the regulatory regime.

As an excellent example of the staggering ignorance (or perhaps venality) that advocates of liberty are up against, consider a comment made by now-retired Supreme Court Justice David Souter about a 1932 decision, Adkins v. Children’s Hospital. In Adkins, the Court declared unconstitutional a District of Columbia law that imposed a minimum wage for women. One of the plaintiffs, Willie Lyons, had been happily employed as an elevator operator, but after the enactment of the law, the hotel that employed her would have had to more than double her wages to comply with the law, a law that was supposed to help working women. Instead of getting higher pay, she lost her job.

The Supreme Court correctly ruled that the law unconstitutionally interfered with freedom of contract. Looking back at Adkins, however, Justice Souter (a typically statist judge) opined that the case “bore the echo of Dred Scott” — the infamous case holding that a slave who was taken into a territory that did not allow slavery nevertheless remained a slave. Comparing a decision upholding the coercion of slavery to a decision protecting the freedom of contract would be an absurdity for a high-school student. For a Supreme Court justice, it is incomprehensible. Obviously, Orwell’s “Newspeak,” where freedom is slavery, is not just fiction; it’s a reality at the U.S. Supreme Court.

Deferring to legislatures

How could anyone defend a law like the District of Columbia’s minimum-wage statute that caused harm to low-wage (or any wage) workers? Sandefur answers that question by pointing to the “progressive” legal philosophy that courts should defer to the judgment of legislatures when laws involving “mere” economic freedoms are involved. Beginning during the New Deal era, justices decided that they should never second-guess supposedly wise, socially conscious politicians if those politicians have decided to take away economic liberties that people had long enjoyed in order to make for a “better” society. Never mind if the law had ruinous consequences for some people or had been motivated by a desire to benefit some special-interest group. The justices said that they must defer to the will of the legislature when it came to issues involving freedom to work, produce, and trade.

Thus was born the constitutionally dubious doctrine that (again adverting to Orwell) some rights are more equal than others. Specifically, courts were to give “strict scrutiny” to rights the justices thought “fundamental” (such as voting), but give other rights only minimal scrutiny, which meant that the law would be upheld as long as the politicians might have had some rational basis for favoring it. Sandefur takes us through a nasty thicket of cases that demonstrate the baleful consequences of the idea that economic liberties are not really important and can be left to the tender mercies of politics.

For example, Oklahoma has a licensing law that makes it illegal for anyone who is not a licensed funeral director to sell burial caskets. The effect of that law is to cartelize the casket business and ensure high prices for purchasers — a special hardship on the poor. When a firm entered the market by selling caskets over the Internet, Oklahoma ordered it to cease because the owners were not licensed funeral directors and therefore were not allowed to do any of the business the state had reserved for those with licenses. The Tenth Circuit Court of Appeals upheld Oklahoma’s law, even though there was no reason to believe that it protected anyone except funeral directors.

In fact, the judges in the case wrote that they needed to defer to the legislature on the grounds that protecting an industry against competition “constitutes a legitimate state interest.” Moreover, they said, if courts were to start to seriously examine the rationale for business and labor regulations, that could upset a lot of laws going all the way back to the New Deal. Horrors! Sandefur acidly comments, “In short, because legislatures pass such measures so often, and have done so for so long, it must be constitutional.”

Violating contractual rights

Much of the damage that has been done to economic liberty has occurred because of the legal evisceration of the right to freely enter into contracts and have them upheld. A contract is a voluntary agreement that is legally enforceable. The trouble is that legislatures and courts often decide that contracts won’t be enforced if they think it would be unfair or undesirable to do so. After World War I, for instance, a number of cities passed anti-eviction laws to allow tenants to remain in apartments even though they were not paying the higher rents their landlords were charging under the terms of the contracts. The laws provided that tenants could not be evicted so long as they were paying “reasonable” rent. Such laws were constitutional, the Supreme Court declared, because the “housing emergency” gave the government the power to deal with the shortage by trampling on rental contracts.

Here we encounter another of Sandefur’s villains, namely the “living Constitution” theory. The Constitution contains clear language that forbids the states to enact  laws that “impair the obligation of contracts.” So how could Minnesota get away with a law enacted during the Depression that prevented banks from foreclosing on homebuyers who had defaulted on their mortgages? That was a pretty big impairment of the contractual obligation. But in Blaisdell v. Home Savings and Loan, the Supreme Court declared that Minnesota’s law was permissible because the Constitution was a living document that had to be “interpreted” differently at different times. The justices “interpreted” the Contracts Clause by just ignoring it. That approach is a one-way ratchet that always permits politicians to whittle away at economic freedom, claiming that “the times” require doing that.

Among the many disgusting cases Sandefur presents, perhaps the most appalling is one involving a Dutch immigrant, Hein Hettinga, who was a dairy farmer. The sale of milk (and other agricultural products) is heavily regulated by the federal government in order to keep prices high. Hettinga, however, discovered a loophole in the regulations. Because he milked his own cows and bottled and distributed the milk himself, he was not subject to federal or state price regulations. He began selling milk to Costco and other retailers, charging 20 cents per gallon less than the mandated price. His company prospered. Consumers saved money.

But, of course, the established dairy industry hated to face competition and called upon political allies to close the loophole, Sen. Jon Kyl of Arizona and Rep. Devin Nunes of California in particular. Those Republicans quickly introduced a bill called the Milk Regulatory Equity Act to stop the “inequity” of allowing Hettinga to run his business competitively. Anyone who is fed up with the rhetoric about Republicans’ being for free enterprise and limited government will savor Sandefur’s comment: “In a classic example of doublespeak, Nunes urged Congress to ‘restore free market principles and fair regulation to the dairy industry’ by prohibiting Hettinga from selling his milk as he chose.” The bill was passed with no hearings and signed by George W. Bush.

Sandefur covers the waterfront in this comprehensive book, including the use of zoning to prevent people from engaging in business, antitrust law to slam businesses that compete too successfully, the abuse of tort law, occupational licensing, regulatory takings of private property, and much more. Along the way, he repeatedly spars with and batters famous legal scholars such as Roscoe Pound, Oliver Wendell Holmes, Robert Bork, Laurence Tribe, and Cass Sunstein. I strongly recommend The Right to Earn a Living for both its careful legal scholarship and its refutation of the notion that economic liberties are less important than others.

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    George C. Leef is the research director of the John W. Pope Center for Higher Education Policy in Raleigh, North Carolina. He was previously the president of Patrick Henry Associates, East Lansing, Michigan, an adjunct professor of law and economics, Northwood University, and a scholar with the Mackinac Center for Public Policy.