Fundamental Right or "Public Benefit?"

 

 

Wants to Pursue His Vocation

 

Sergio Garcia recently passed the California Bar Exam on the first try and wants to practice law.  There is one problem.  His parents brought him to this country illegally when he was a child, with the result that his presence in the United States is unlawful.  While the California State Bar wants to admit him to the Bar, and the California Attorney General agrees, the Obama Administration is trying to stand in the way.  In particular, the Administration contends that allowing an individual to practice law is a conferral of a "public benefit," akin to an outright grant of money such as student loans, food stamps, or farm subsidies.  (See here for the government's brief).  As a result, it says, federal law requires the California courts to deny Mr. Garcia's application, because states may not grant individuals illegally present in this country such benefits unless the legislature of the state has expressly authorized the conferral of such a benefit.  See 8 U.S.C. § 1621.  

 

The administration's position has some basis in the statute, which defines "public benefit" to include "grant[s]," "commercial licenses" and "professional licenses . . . provided by any state agency or appropriated funds of the state."  See 8 U.S.C.1621(c).  (However, the California Committee of Bar Examiners has authored a powerful response, contending that bar admission does not satisfy the statutory definition of "public benefit.")   Moreover, the characterization of the practice of law as a state-conferred benefit accurately reflects how many members of the Bar view the legal vocation.  No less an authority than the American Bar Association, for instance, asserts that the ability to practice law is a "privilege" that society "confers" on individuals, with the result that lawyers are thereby obligated to provide some members of society free legal services in return.  (See here).  Some academics concur.   See e.g. Deborah Rhode, Cultures of Commitment: Pro Bono for Lawyers and Law Students, 67 Fordham L. Rev. 2415, 2419  (1999) (contending that lawyers' "privileged status" thereby obligates them to provide free legal services to others).  The Supreme Court has generally bolstered this characterization, by refusing to protect vocational liberty against arbitrary abridgments.   Thus, under current law, states may exclude individuals from their chosen vocation so long as a court can identify a single, hypothetical purpose that such exclusion might serve, without regard to whether the law actually serves that purpose.   See Williamson v. Lee Optical, 348 U.S. 483 (1955); United States v. Carolene Products, 304 U.S. 144 (1938) (sustaining ban on interstate shipment of filled milk by invoking baseless and pretextual health rationale).    Indeed, the Supreme Court has in one case rejected an occupational liberty challenges without identifying any plausible purpose served by the restriction.  See Ferguson v. Skupra, 372 U.S. 726, 728-31 (1963).  See also Nebbia v. New York, 291 U.S. 502 (1934) (sustaining minimum price regulation of independent retailers without identifying any plausible object of the law).  Compare Baird v. Arizona State Bar, 401 U.S. 1 (1971) (state cannot exclude individuals from a vocation because of political associations protected by the First Amendment).   One federal court has even gone so far as to hold that states may infringe occupational liberty for the sole purpose of enriching incumbent producers at the expense of consumers and potential entrants.  See Powers v. Harris, 379 F.3d 1208 (10th Cir. 2004).  (But see here for a discussion of a more recent decision rejecting this approach.)   The only exception is for those rare cases in which such exclusion violates an independent constitutional provision.   See e.g. Baird v. Arizona State Bar, 401 U.S. 1 (1971) (state cannot exclude individuals from a vocation because of political associations protected by the First Amendment).  There as a time, of course, when the Supreme Court took a different view, protecting liberty of occupation from infringements that did not serve a valid purpose.  See e.g. Allgeyer v. Louisiana, 165 U.S. 578 (1897) (unanimous). 

Thus, the Obama Administration's claim that a professional or commercial license is properly deemed a "public benefit" that governments generously confer on their citizens has substantial basis in statutory and constitutional law.  While defensible, this argument is still troubling.  After all, no one would seriously contend that the right to worship (or not) as one pleases or the right to write a poem or a song is a "public benefit" that the State can confer or withhold at will, regardless whether the individual exercising the right is lawfully present in the U.S.A.  Still, Congress, other public officials and academics have asserted, with a straight face, that the right to pursue a chosen vocation is no right at all, but instead a form of largess the State may (or may not) shower on its citizens.   The contemporary rhetorical plausibility of this argument illustrates just how far the national and state governments have exceeded the proper scope of regulation in a truly free society.

As previously explained on this blog, however, government exists to facilitate the exercise of liberty, not to restrict it. As James Madison, the cousin of this Blog's namesake, explained in Federalist 10 and elsewhere, individuals leave the state of nature and form governments so as to enhance their liberty, what Madison called "the faculties of acquiring property." To be sure, entering society requires individuals to forfeit a portion of their liberties, thereby empowering the State to restrict some freedoms.  In particular, individuals who leave the state of nature and enter society give up their right to restrict the freedom of others, on the understanding that others who enter society have given up the same rights.  This social contract between such individuals both empowers the state to act but also places limits on the scope of state authority to regulate, tax and spend.  In particular, states may ban murder, battery, theft, fraud and other conduct that harms others and raise revenue via taxation to fund the police and courts necessary to enforce such restrictions.  However, states may not restrain harmless conduct, whether pursued unilaterally or in concert with others, including the pursuit of harmless occupations.  On the contrary, states should facilitate such conduct by protecting property rights, enforcing contracts and the like.  States that do purport to prohibit such conduct and impose taxes to support such regulation do so without any basis in the social contract from which they purport to derive their authority.  

Thus, as Madison put it, in his 1792 on Property:

 

"That is not a just government, nor is property secure under it, where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called."

Thus, refusal to ban consensual transactions that have no impact on third parties is not a conferral of a "public benefit" but instead reflects the State's respect for the limits of the authority granted by the social contract and enforcement of an institutional framework that facilitates the exercise of fundamental freedoms.

No doubt Mr. Garcia's continued presence in the U.S.A. itself raises difficult questions of immigration policy.  Some would argue that, because his parents brought him here as a child, he should remain indefinitely, so long as he obeys the law and remains a productive member of society.  Others would contend that he should return to the country of his birth and join those who are applying through normal channels for permission to enter the United States lawfully.  However one resolves this dispute, one thing should be clear:  Mr. Garcia is not asking for public largess but instead seeks to hold the State to the terms of the social contract that Madison described.  

Liberty, Power and Hobby Lobby v. Sebelius

Imposers in Chief

 

 

Understood the Difference Between "Liberty" and "Power"

 

 

Ditto

 

A recent essay in Slate magazine by Dahlia Lithwick takes issues with the Tenth Circuit's decision in Hobby Lobby v. Sebelius, which invalidated, as applied to Hobby Lobby, Inc., regulations promulgated by Secretary of Health and Human Services (HHS) Kathleen Sebelius (pictured above with President Obama)  pursuant to the Affordable Care Act.  The regulations require corporations and other firms with fifty or more employees  to purchase various forms of contraception for their employees, even when purchasing such contraception violates the owners' unanimous and deeply held religious beliefs.  Like several other federal courts, the Tenth Circuit held that coercing the owners of Hobby Lobby, a closely-held corporation owned by five family members, to violate their religious beliefs in this manner contravened the Religious Freedom Restoration Act ("RFRA").   RFRA is a federal statute, the core of which prevents the Federal Government from  burdening religious liberty.    Passed after Employment Division v. Smith, 494 U.S. 872 (1990), which held that generally-applicable and neutral laws do not violate the Free Exercise Clause of the First Amendment, the statute prevents federal agencies from placing a substantial burden on the exercise of religion, even by means of a generally-applicable regulation, unless such a burden is the least restrictive means of accomplishing a compelling state interest.  In short, the statute reinstates, as against federal agencies, the standard articulated by Justices Brennan and Douglas, respectively, in opinions for the Court in Sherbert v. Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972), both of which Smith overruled.    See also Smith, 494 U.S. at 893-900  (O'Connor, J. concurring in the judgment) (endorsing the Sherbert test).   

 

Lithwick's essay repeatedly asserts that firms such as Hobby Lobby are claiming the right to impose their owners' religious beliefs on others by somehow barring their employees from using contraception.  For instance, the subtitle of the essay predicts that: "[t]he Supreme Court will soon decide if CEOs can impose their religious convictions on the people who work for them."    The piece also contends that  "[e]mployees who choose to use contraception (as 99 percent of us will do at some point) shouldn’t do so at the sufferance of their bosses."  The piece also asserts that, under the Tenth Circuit's approach:  "Constitutional protections of a single employer’s individual rights of conscience and belief become a bludgeon by which he [or she] can dictate the most intimate health decisions of his [or her] workers, whose own religious rights and constitutional freedoms become immaterial." (emphasis supplied)  In other words, Lithwick claims that Hobby Lobby's exercise of religious liberty reduces the liberty of some of its employees, with the result that the HHS regulations invalidated in Hobby Lobby actually promote liberty.

If in fact employers were coercively dictating their employees' religious beliefs,  regulations necessary to forbid such coercion would satisfy RFRA's compelling state interest test.  However, Lithwick's colorful rhetoric fundamentally mischaracterizes the question that was before the Tenth Circuit in Hobby Lobby.   For one thing, the court expressly disclaimed any reliance upon the Constitution, choosing instead to ground its decision on RFRA.  (See page 9, n. 2)    More fundamentally, Hobby Lobby's  owners do not seek to impose their beliefs on anyone or otherwise prevent their employees from using contraception.  Nor does the rationale of the Tenth Circuit's decision even remotely threaten such a result.  After all, Hobby Lobby has no power to conscript employees to work for it; nor does it have the power unilaterally to impose particular terms of employment.  Instead, its employees are members of a free society who voluntarily consent to their place and conditions of employment. (Lithwick provides no evidence that Hobby Lobby or other religiously-motivated firms have used fraud, unfair bargaining tactics or coercion to induce employees to work for them.)  In these circumstances, an employer's failure to cover a particular medical service or procedure does not "impose" the employer's convictions (religious or otherwise) on the employee any more than the enforcement of a standard deductible or co-pay is such an imposition.  Invoking such reasoning, an employer could also claim that an employee who declines to work extra hours for no pay "imposes" its will on the employer.  

 

To be sure, some employment agreements may appear less than voluntary.  For instance, a particular firm might be the only employer in a small, remote town.  Or, an employee may have remained so long at a particular firm that his or her skills may be useless elsewhere, with the result that he or she has no meaningful choice but to remain at the same employer.  In such cases the employer in question could have market power in the labor market, power that it could use to pay unduly low wages or foist on employees terms of employment that would not survive in a more competitive environment.  Even in such circumstances, however, a failure to pay for contraception would not "impose" the firm's beliefs upon its employees.   After all, failure to pay for someone else's contraception is just that; a failure to pay.  Hobby Lobby has not sought to prevent employees from using their own incomes to purchase contraception, or anything else for that matter.  Indeed, firms that do not  provide such coverage will incur slightly lower costs, realize a slightly larger net marginal product from each employee and thus pay slightly higher wages, wages that employees can use to purchase whatever they wish, including contraception.  (This is true, it should be noted, even if a firm possesses market power.  Such firms cannot both use the same power to reduce wages and impose inferior benefits.  They must choose one or the other.)  Hobby Lobby's employees remain perfectly free to purchase their own contraception.  Treating such employees as victims of coercive interference with their own liberty, religious or otherwise, stretches such concepts well beyond any useful meaning.  One might just as well claim that a Progressive employer "dictates" employees' beliefs and reduces their liberty when he or she refuses to provide free parking because he or she has a religiously-grounded objection to global climate change and commuting by car. 

Indeed, Lithwick's claim of religious coercion proves far too much.  After all, if Hobby Lobby is dictating its employees' beliefs, then so too is every firm and individual that declines, because of religious beliefs, to purchase contraception (or anything else) for someone else.  Assume for a moment that some pharmacists provide free contraception to their customers, perhaps as a loss leader, to lure them away from competing pharmacists.  Assume further that other pharmacists decline to adopt such a strategy because of their religious beliefs.  Under Lithwick's reasoning, those pharmacists who decline to subsidize their customers' use of contraceptives are "dictating" these customers' beliefs and interfering with their liberty, even though the customers remain perfectly free (as do Hobby Lobby's employees) to purchase contraceptives at market prices.  Such a claim of coercion refutes itself and incorrectly equates individual liberty with a legal right to extract financial resources from others. 

Lithwick's argument exemplifies what F.A. Hayek once characterized as the unfortunate tendency to redefine liberty as an individual's "power to do certain things," or "the effective power to do what we want," without external constraint.  See  Friedrich H. Hayek, The Constitution of Liberty, 16-20 (1960). Redefined in this way, such "positive liberty" often consists of the power to coerce others to subsidize the individual's chosen activities, whether parking or contraception.  This redefinition deprives the term "liberty" of any useful meaning, transforming normative questions about the proper scope of liberty into a policy choice between the wants and desires of competing individuals, each of whom can claim that a choice in his or her favor enhances (his or her) "liberty."  Even slave owners could (and did) claim that slavery enhanced their liberty, by increasing the slave owner's material welfare at the tragic expense of those unjustly enslaved.  Lincoln, of course, properly rejected this definition of liberty and the concomitant equation of "liberty" with power over others, calling such "liberty" the alleged right of "some men to do what they please with other men, and the product of their labor."  (See Address At A Baltimore Sanitary Fair, April  1864).  He instead preferred the right "of each man to do as he pleases with himself, and the product of his labor."

No doubt Lithwick, too, would sincerely reject the slaveowners' claim, although without invoking Lincoln's straightforward distinction between negative and positive liberty.  Still, her argument diverts attention from the real source of coercion in this context.  After all, as the Tenth Circuit held, the regulationsc hallenged in Hobby Lobby coerce some employers to violate their own religious beliefs.  That is, it is the Obama Administration, and not Hobby Lobby, that seeks to impose its views on others.  Legislative imposition of views is not ipso facto inappropriate; by its nature, laws "impose" some view on others.  However, regulations that require individuals to violate their sincerely held religious beliefs are prima facie violations of RFRA.  As shown above, such regulations do not enhance anyone's liberty, but instead extinguish it.  Absent identification of some other compelling state interest, RFRA's protection for liberty must prevail.

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:

http://reason.com/archives/2010/04/06/up-from-slavery

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.

A

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.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=909241

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.

B

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.