Tuesday, May 4, 2010

Are We More or Less Free Than Our Ancestors?

Patrick Henry

Give me (ever-increasing?) liberty or . . . . .

Over at Reason.com, David Boaz makes a provacative argument that Americans, as a whole, enjoy more liberty today than we did, say, 50, 100 or 150 years ago. Boaz's assertion is contrary to the complaints of libertarians who lament what they characterize as a continual expansion of government at the expense of individual liberty, an expansion they often measure by examining the share of GDP that government consumes.

Here is a link to the Boaz post:


Among other things, Boaz points that many accounts of a purported "Golden Age" of 19th Century Liberty ignore the institution of slavery. In the same way, many accounts of a less intrusive state early in the 20th century ignore so-called Jim Crow laws, which were of course very intrusive on human liberty, to say the least. To the extent that legal and constitutional developments (and of course the Civil War) eliminated slavery and Jim Crow laws, human liberty has increased, Boaz rightly asserts.

Boaz also makes a broader claim, namely that, overall, Americans are more free now than we were, say, two generations ago. He quotes the following argument by Brink Lindsey, from his book The Age of Abundance (2007). According to Lindsey:

"Nevertheless, the fact is that American society today is considerably more libertarian than it was a generation or two ago. Compare conditions now to how they were at the outset of the 1960s. Official governmental discrimination against blacks no longer exists. Censorship has beaten a wholesale retreat. The rights of the accused enjoy much better protection. Abortion, birth control, interracial marriage, and gay sex are legal. Divorce laws have been liberalized and rape laws strengthened. Pervasive price and entry controls in the transportation, energy, communications, and financial sectors are gone. Top income tax rates have been slashed. The pretensions of macroeconomic fine-tuning have been abandoned. Barriers to international trade are much lower. Unionization of the private sector work force has collapsed. Of course there are obvious counterexamples, but on the whole it seems clear that cultural expression, personal lifestyle choices, entrepreneurship, and the play of market forces all now enjoy much wider freedom of maneuver."

On the whole, Boaz and Lindsey make some powerful points. Indeed, they have overlooked two additional expansions of private liberty over the last two generations: 1) the substantial contraction of antitrust regulation and 2) the recognition that so-called "commercial speech" enjoys some First Amendment protection, thereby mandating the substantial deregulation of advertising. In the remainder of this post I elaborate on these two omissions but then also suggest that some of the developments invoked by Boaz and Lindsey do not necessarily reflect expansions of liberty. Indeed, those who, like Lindsey and Boaz, claim that liberty has expanded compared to prior eras must develop a defensible definition of liberty; focusing on the mere absence of coercive governmental restraint will not suffice.


1) Antitrust: During the 1960s courts and antitrust enforcement agencies were hostile to most non-standard contracts, that is, agreements that did more than simply mediate the passage of title from a seller to a buyer. Tying contracts, exclusive dealing contracts, restraints on prices dealers could charge and restraints on to whom and where dealers could sell a manufacturer's product --- all were unlawful per se or nearly so. In FTC v. Brown Shoe, for instance, 384 U.S. 316 (1966), the Supreme Court affirmed the Federal Trade Commission's ban on an agreement between Brown Shoe and 1 percent of the nation's shoe stores requiring such stores to do business primarily (but not exclusively) with Brown. Courts also banned all tying contracts obtained by sellers with "economic power" over a tying product, holding that the mere possession of a trademark established the requisite economic power sufficient to condemn such an arrangement. Thus, a franchisor could not, for instance, require its franchisees to purchase spices, batter mixes or paper products from the franchisor. See Siegel v. Chicken Delight, 448 F.2d 43 (9th Cir. 1971). Courts and the enforcement agencies were equally hostile to mergers. In Brown Shoe Co. v. United States, for instance, the Department of Justice challenged, and the Supreme Court condemned, a merger that resulted in a firm with an eight percent share in a market with more than 3,000 other market participants and low barriers to entry. (About 150 new firms had entered the market in recent years.)

All of this started to change in the late 1970s, by which time transaction cost economics (TCE) had undermined price theory's workable competition model and offered beneficial explanations for non-standard contracts. In Continental T.V. v. GTE Sylvania, 433 U.S. 36 (1978), the Supreme Court abandoned its hostility to non-price vertical restraints, holding that courts should analyze such agreements under a forgiving rule of reason test that validates nearly all such agreements. As the Sylvania Court recognized, such restraints, while reducing competition between dealers, can in fact overcome the market failure and resulting underproduction of promotional information that would result from unbridled competition between dealers. Subsequent decisions applied the Sylvania rationale beyond the vertical context, holding that, for instance, horizontal restraints ancillary to an otherwise legitimate joint venture can also overcome market failure, enhance the allocation of resources and improve the welfare of consumers. Justice Stevens, who recently retired, presaged this expansion of Sylvania's rationale in NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984), when he invoked Sylvania's logic in support of his statement that a horizontal restraint over one form of competition can in fact enhance overall competition in the marketplace and thus enhance consumer welfare. I tell the story about the origin of the inhospitality tradition and TCE's overthrow of that tradition in the following paper:

Price Theory, Competition and the Rule of Reason, 2003 Il. L. Rev. 77.


During the same period, the courts and enforcement agencies also radically revised merger doctrine, holding that proof that a merger will lead to high levels of concentration in a properly-defined relevant market is necessary (but not sufficient) to justify banning such a transaction. Moreover, even if a merger did, in fact, lead to high concentration in a relevant market, the transaction would still survive scrutiny if the threat of entry would counter-act any resulting anticompetitive output reduction produced by actual or tacit collusion. In 1982 the Department of Justice essentially codified this sea change in merger policy, issuing enforcement guidelines that, had they applied in the 1950s, 1960s and 1970s, would have validated countless transactions that enforcement agencies challenged, and courts voided, during these decades.

In short, the massive shift in antitrust policy, from a regime of extreme intervention to one of comparative laisseze faire, left countless transactions, contracts and other commercial practices there were once unlawful, even though they harmed no one, unmolested by the law, thereby expanding liberty significantly.

2) Commercial Speech. During the 1970s the Supreme Court found that commercial advertising is "speech" within the meaning of the First Amendment, thereby voiding much regulation of advertising. The seminal case was Virginia Pharmacy Bd. v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976), where the Supreme Court struck down a Virginia statute that banned price advertising of pharmaceutical products. Since then the Supreme Court has repeatedly held that states may not ban truthful advertisements for lawful products. The result, of course, has been more advertising, i.e., more liberty for firms that wish to provide information to consumers. Moreover, the ability to advertise makes new entry more likely, thus enhancing the liberty of firms previously excluded from the market by advertising bans. Consumers, of course, end up paying lower prices and making better-informed decisions about which products to buy or not to buy.


At the same time, Lindsey and Boaz may overstate their case somewhat. That is to say, not every development Lindsey invokes necessarily entails an expansion of liberty. Some may have actually reduced liberty, properly understood.

Take the rights of criminal defendants. Certainly various developments in the law over the last several decades have made it more difficult to convict a criminal defendant. These developments, then, have enhanced the liberty of those accused of crime. Still, Lindsey (and Boaz, apparently) do not consider the possibility that some individuals who escape punishment because of these developments are guilty, more precisely, guilty of interferring with someone else's liberty or property. Rules that increase the risk of letting guilty criminals off the hook can actually REDUCE liberty in a couple of ways. First, such mistakes can undermine the deterrent effect of the criminal law. Less deterrence, of course, means more crime, and thus less liberty for those who become victims of crime. In these circumstances, the state can only restore deterrence by increasing the penalties on those who are properly convicted (further reducing their liberty). Second, wrongly exonerated individuals who thereby avoid prison or capital punishment may then commit new crimes, thus interferring with the liberty of completely innocent fellow citizens. Indeed, Lindsey himself singles out the strengthening of laws against rape as a development enhancing liberty, and I quite agree. However, one cannot "strengthen" laws if prcedural developments make it too difficult to convict and punish invidiuals who break the newly-strengthened laws. Thus, any argument that enhancing the rights of the accused actually increases liberty requires a showing that the accused whose rights are enhanced are actually innocent, something Lindsey and Boaz does not assert.

Abortion provides another possible example. Lindsey (and Boaz, apparently) are certainly correct that bans on abortion reduce the liberty of the women they impact and, one might add, the liberty of the doctors who wish to perform such procedures, often for money. At the same time, proponents of abortion would argue that there is a third party involved, namely, the fetus. If, as many argue, a fetus is an actual human being, then a ban on abortion may, despite its significant impact on the liberty of the child's mother and her physician, enhance overall liberty, except of course in those cases in which abortion is necessary to protect the life of the mother, by protecting the life of the fetus until its birth. Put another way, such laws could be deemed analogous to bans on child abuse, though of course an abortion ban places a greater burden on the the regulated party than a ban on child abuse.

The rights of the accused and abortion examples, then, serve as reminders that a society that wants to maximize liberty might have to do more than simply minimize state-enforced coercive restraint on individual freedom of action. While such an approach might maximize "liberty" in some sense, it's not the sort of "liberty" that anyone, in the end, wants to maximize. (No one, I assume, would anyone think that the state should stand idly by while one individual used private force to enslave or kill another.) Maximizing actual human liberty requires some coercive restraint, imposed by the state; this is why humans leave the state of nature and enter political society, delegating to the state the authority to impose coercive restraints when necessary to enhance liberty. Any effort to measure the quantum of liberty enjoyed today compared to that enjoyed 20, 50 or 100 years ago must acknowledge this fact and include some methodology for defining and measuring the sort of actual human liberty --- one might say actual human welfare --- that is the object of government to enhance.