As bad as the economics of the Carrier shakedown may be—and it is entirely unclear in which direction the shaking went down, except to note that a supply of rents tends to create a demand for them—the constitutional politics are far worse.
The world would be a much better place if economists, politicians and pundits had this line from Henry Hazlitt memorized: “What is harmful or disastrous to an individual must be equally harmful of disastrous to the collection of individuals that make up a nation.”
It’s arguably the most important line ever written in any economics book. Hazlitt (1894-1993) was making the essential point that an economy is not a living, breathing blob; rather it’s a collection of individuals.
No one likes being in a prisoners’ dilemma. The tragedy of the prisoners’ dilemma, as it were, is that all the players in the game can see the cooperative, Pareto-superior outcome, but they can’t reach it, at least not without changing the game. They can’t reach it even though it’s right there, seemingly within grasp, and even though they all agree they’d all be better off if they did reach it.
Is Bernie Sanders or Donald Trump a greater long term threat to the principles of classical liberalism? Trump’s program is antithetical to classical liberalism. He wants to follow protectionist trade policies. He has disclaimed any interest in reforming the burgeoning entitlements that are the principal engines for growing the state. He seems to quite content to praise authoritarian leaders abroad, like Vladimir Putin. He wants to make it easier for public figures to sue private citizens for their criticism. And he is so vulgar and gratuitously offensive that he undermines the culture of self-restraint necessary to the classical liberal order.
Of course, Sanders is worse on many of these axes. He not only wants to preserve all entitlements but add to social security and to create an entirely new entitlement to higher education. He also is a protectionist. He would destroy the private provision of health care. And he would raise tax rates sky high. As for authoritarianism, he seems to have trouble condemning any regime, such as Cuba, so long as he can entertain the false belief that the regime has been good for the social welfare of its citizens.
American exceptionalism may be disappearing. American exceptionalism posits that the United States is fundamentally different from other nations, particularly those in Europe. The United States was founded on a commitment to principles whereas other nations were founded on ties of blood. Moreover, our principles were those of the Enlightenment, embracing individual liberty and the rule of law.
One of the results, as Seymour Martin Lipset noted, was that the United States has never had a serious socialist party. But in this election cycle a serious socialist has come close to winning the Democratic nomination. Indeed, Sanders would be winning except for the loyalty Clinton enjoys among African American voters. But as the votes of the congressional Black Caucus show, African American voters are the most left-wing bloc economically. Next time they would be likely vote for the socialist candidate who imitates Sanders.
We have also never had a major nationalist party, like the National Front in France. Such parties run not only on protectionism and xenophobia but on preserving an unreformed entitlement state. But Trump’s platform is a somewhat paler version of such virulent European parties.
The combination of Trump’s and Sanders’ rise shows that the candle of liberty by which American exceptionalism glows may be flickering out.
In a previous post, I argued that the Fourteenth Amendment protects economic liberties. One concern often expressed about such protection is that the courts would become “a perpetual censor” of all legislation. But the best evidence of the originalist standard of review shows that concern is misplaced. The standard forbids economically protectionist legislation directed against citizens within a state, but is otherwise relatively modest.
Here Justice Field’s dissent in Slaughterhouse is again instructive both about which rationales justify trenching on economic liberties and which do not. (While his opinion relied on the Privileges or Immunities Clause, two justices who would have also relied on the Due Process Clause concurred on these standards). Fields, of course, would have invalidated the Louisiana monopoly that made it impossible for other butchers within the state to compete in New Orleans. Thus, it is not a justification under the Fourteenth Amendment to prefer one group of citizens to another. Economic protectionism, which is the essence of a state granted monopoly without public regarding considerations, is thus unconstitutional.
Indeed, no Supreme Court case has ever clearly stated that state regulation based on economic protectionism or on favoring one class of citizens over another is constitutional. The fact that the Court at the height of the New Deal was unwilling to say that states were justified in preferring one class of citizens over another because of politics shows how unpersuasive it the attempt to conclude that purely protectionist legislation meets even the most lenient standard of review.
The harder question is how courts are to proceed, assuming that the defense of the legislation can be rooted in a putative police power objective.
Last week California followed New York in proposing a requirement of 50 hours of pro bono work for prospective lawyers. Unlike New York’s existing rule, which requires lawyers to serve their time before admittance to the bar, the California proposal permits them to meet the requirement shortly afterwards as well. California’s proposal also requires 15 “units” of “experiential learning,” within such activities as clinics or externships, that can be satisfied either during law school or separately in a private externship. This proposal is an unfortunate one–both protectionist and ideologically one-sided.
First, assuming that units translate to credits, the requirement of 15 credits of experiential learning —a significant proportion of law school coursework—will make some students’ legal education less valuable and likely make it more expensive for everyone. Some students would benefit more from the additional course work crowded out by experiential learning.
One exchange in the second Presidential debate caught my imagination. It was the one in which Mr Romney asked Mr Obama whether he ever thought about his pension, and Mr Obama replied that he did not, but that he was sure that it was smaller than Mr Romney’s.
Of course, Mr Romney’s question was itself an attempt to rebut Mr Obama’s assertion that Mr Romney had invested in companies that had outsourced formerly American jobs to China, with the clear implication that Mr Romney had enriched himself thereby. The point of Mr Romney’s rebuttal was that, almost certainly, and whether he knew it or not, Mr Obama had also invested in companies that outsourced American jobs, ergo, where outsourcing was concerned, they were in the same boat.