Saturday, December 16, 2017

The Worst Supreme Court Justice: Oliver Wendell Holmes (Part I)

Oliver Wendell Holmes was a bigoted, hypocritical, and out of touch progressive who had no business being on the Supreme Court. Holmes was known as the “great dissenter” for his many famous dissents. Maybe his worst decision was when he wrote the majority decision in Buck v. Bell in 1927. In this case the Court upheld a Virginia statute making compulsory sterilization of the intellectually challenged legal. In his opinion Holmes says of the Buck family: “three generations of imbeciles is enough”. Kerri Buck was sterilized by the state following this decision. Holmes and the majority sided with Harry Laughlin and his theories of eugenics. Hitler also followed the theories of Laughlin to make the German race pure. This opinion would be somewhat overruled in Skinner v. Oklahoma in 1941 where the Court ruled that procreation was a fundamental right. This decision alone should make Holmes one of the worst judges of American history.

Buck v. Bell personally offends me. After Dred Scott (Blacks had no constitutional rights), Roe v. Wade (Fetuses have no constitutional rights), and Korematsu (Japanese Americans had no constitutional rights – although temporary), I would then place Buck v. Bell as the worst decisions of all time. That is right, I would place Buck in front of Plessy (created the separate but equal doctrine). I had an Aunt born with cerebral palsy and she had a very low IQ. In her 20s she could not ride in a car without her eyes being covered, or even open a can of soup. No one thought she would amount to anything and would be a burden on the family for her entire life. By her mid-30s after much pain and hard work she was an independent woman. She lived by herself in an apartment and worked in the AT&T mailroom. She even got her driver’s license and drove a Mustang. Unfortunately, she died in mid-40s from breast cancer. Over 7,000 people attended her funeral. She touched so many people with her compelling story of resilience. If she had children, I am certain she would have been a better mother than most. She is missed. To think an elitist like Holmes would have tried to stop a life like my aunt speaks volumes. From what I can see and read, my Aunt was a much better human being than Holmes would ever dream of becoming. Still, for some reason (oh yeah he was a progressive) history views Holmes favorably.

Holmes bigotry towards women goes further than sterilizing them. Before getting into this, we must first understand the type of lawyer Holmes was. This can be explained in his dissenting opinion in Lochner v. New York. This case dealt with work hour limitations for bakers. Holmes is correct that the majority should not have elevated the “freedom of contract” to a fundamental right (although “freedom of contract” is listed in the Civil Rights Act of 1866 which is an interpretation of the Fourteenth Amendment). But historians and Holmes are incorrect to say that all state statutes must be “presumed” constitutional and the “burden of proof” falls on citizens to prove federal and state laws are unconstitutional. Most historian’s side with Holmes and say Lochner was incorrectly decided. But even if you accepted the narrative (rationale) that working in a bakery was a “dangerous” occupation, the law could easily be seen as arbitrary or discriminatory for several reasons. First, the law only focused on one “dangerous” profession and secondly, the law favored big corporate bakeries over “mom and pop” shops since big bakeries could afford to pay workers for 3 shifts over 7 days a week whereas a “mom and pop” shops could not afford to do so. The law drove many small bakeries out of business. So, for these reasons, striking down the New York hour limitation statute could be seen as rationale. Holmes practiced what is commonly referred to as “judicial restraint”. He applies “restraint” from striking down government laws because he presumes a law is constitutional first and foremost and the burden is on the people to prove the law in unconstitutional. Most people do not use the term “judicial restraint” correctly – it is not a good term to define a judge. In his Lochner dissent, Holmes said that the “word liberty, in the Fourteenth Amendment is perverted when it is held to prevent the natural outcome of a dominate opinion”. That is some dangerous stuff for several reasons. First, to consider our liberty and the Fourteenth Amendment as “perverted” is troublesome at best and secondly, it is important to note that a majority of Americans had a low opinion of intellectually challenged persons so that must make their liberty guaranteed by the Fourteenth Amendment moot or worthless as Holmes decided in Buck.

In Bailey v. Alabama (1911), the Court struck down an Alabama law (using the Thirteenth Amendment) where blacks that signed work contracts were imprisoned and sentenced to hard labor if they did not honor the contract. It was obvious Southern states were coming up with imaginative and creative ways to keep blacks as slaves and they devised this scheme. Holmes could not see through the guise of Alabama to oppress blacks so he dissented. Holmes said that this law “mainly concerns the blacks does not matter.” Holmes, all the sudden in this case is in favor of the “freedom of contract” by saying “the Thirteenth Amendment does not outlaw labor contracts.” And neither did the Fourteenth Amendment in Lochner v. New York. He also says “But if it is a perfectly fair and proper contract, I can see no reason why the state should not throw its weight on the side of performance.” He also contends the way Alabama set up this scheme (whites did not get work contracts) “it does not make the laborer a slave” since “imprisonment with hard labor is not stricken from the statute books.” If the law only affects blacks, then yes, it is discriminatory and its purpose is to make blacks slaves again under the guise of prison labor. From this, it is obvious to know how Holmes would have sided on Plessy v. Ferguson decided just fifteen years prior. He would have said “separate but equal” was constitutional because that is what a “majority” of Americans prefer. Remember, Holmes was friends with President Woodrow Wilson (another bigot) who segregated federal employees. Buchanan v. Warley decided in 1917 was a unanimous decision. Holmes wanted to dissent and even wrote a scathing dissent but was finally convinced to join the majority. In this case, the Court held that a Kentucky law forbidding home sales to blacks in white neighborhoods was unconstitutional using the “perverted” Fourteenth Amendment. Holmes wanted to side with state “police power” to uphold the law because it would “preserve the peace” by keeping neighborhoods segregated. Or as the defense said in the case “to maintain racial purity”.

Wednesday, December 13, 2017

The End of Economic Freedom (Part VI)

Originally, the Court found First Amendment rights did not apply to commercial speech (Valentine v. Chrestensen, 1942). However, that outcome changed in Virginia State Board of Pharmacy v. Virginia Consumer Council (1976). In this case, the Court held that commercial speech was protected speech. After all, it is extremely difficult to distinguish between commercial and non-commercial speech. This makes perfect sense since the Constitution provides for Freedom of the Press (commercial businesses) which includes advertisements. However, just four years later in Hudson Gas and Electric Company v. New York the Court introduced a new level of scrutiny for commercial speech (intermediate scrutiny). Thus, commercial speech is held to a higher level of scrutiny than non-commercial speech. The most egregious court ruling for commercial speech was the 2002 decision in Nike v. Kasky. In this case, the California Supreme Court found that speech used by Nike to defend itself from allegations that it makes their products in third world country sweat shops was not protected speech. Even if the information is factual, it is best for companies to defend themselves by remaining silent to avoid further lawsuits. This is a move to silence companies from using anti-government or anti-regulatory speech. The bottom line is that companies who seek to prove an economic freedom using freedom of speech rights still face an uphill battle since commercial speech faces a higher level of scrutiny than non-commercial speech.

An interesting case was Daimler Chrysler Company v. Cuno (2006). The Court dismissed the case since the plaintiff had no standing. Thus, the lower court ruling was overturned. This case did not involve economic freedom, but instead a concept known as “competitive federalism”. In this case, the defense argued that states offering favorable tax rates to recruit or lure companies from another state was unconstitutional. Although the Sixth Circuit agreed with the defense, this result was a sham. If this result is correct, then why bother to have states. This opinion implies that all states should have the same tax rates and tax laws. This would destroy federalism (state and federal government) separation of powers in the Constitution. Some say the biggest right for citizens is the right to vote. I disagree, the biggest right for citizens is the right to travel seamlessly throughout the United States. Individuals and companies can “vote with their feet” and move to states that have more favorable laws for social and or economic issues. It would be a huge injustice for corporate and individual rights if competitive federalism is destroyed by the courts. This would further stifle job growth, cause product costs to rise, and eliminate innovation. It would also force companies to send more manufacturing jobs overseas.

The Supreme Court has yet to garner any First Amendment rights to corporate logos or any type of branding. State court cases over logos and branding have been at best mixed. For instance, a Florida statute prevented a lawyer from using a pit bull as its logo. Another speech issue of great importance to corporations is government compelled speech. The government compels corporate speech all the time. Consider the dairy farmers “Got Milk?” campaign. The government compelled dairy farmers to contribute to a fund to run these ads. In Glickman v. Wileman Brothers and Elliot, California farmers sought to stop a compulsory government fund for peaches and plumbs. The Supreme Court held that the government can compel money to promote products even if some farmers sought to use money to personally promote their own products. The Court backtracked a bit in United States v. United Foods when it held compelled government speech (money) for mushroom adds was unconstitutional. But the Court continued its destructive ways on businesses in Johanns v. Livestock Marketing Association when the Court held the government can take money from farmers to promote beef: remember the adds “Beef: It is what is for dinner.”? This was compelled government speech. If A has a better product than B then it makes little sense for A to advertise with B, but this is what is happening under compelled government speech. Compelled speech may take other forms as in the Masterpiece Cakeshop case where the government compels store owners to appease the rights of customers even if they conflict with the rights of store owners. Another future 2018 case, National Institute of Family and Life Advocates v. Becerra, is a case where a California law attempts to compel pregnancy centers to offer patients abortion options. That is analogous to having the government compel McDonalds into selling wholefood options – this would violate their free speech.

Today, economic freedom and the right to work, face a bigger uphill climb than even slavery. Since the adaption of the Constitution, at least half the country thought slavery was unconstitutional and even fought a war to end the barbaric institution. At least half the country thought segregation and Jim Crow laws were wrong until they were finally overruled. Today, both the Left and Right continue to see decisions such as Lochner as being wrongly decided. However, both the Left and Right agree that the Slaughter House cases were decidedly incorrectly but neither side (other than Clarence Thomas) is willing to overrule the case. Both sides believe the Privileges and Immunities clause was improperly taken out of the Fourteenth Amendment in the Slaughterhouse decision. But both sides are leery as to how the other side will interpret the amendment. The Left fears that the privileges and immunities clause will allow the Right to bring back economic freedoms and overturn much of those horrid decisions of the FDR progressive Court. On the other hand, the Right fears that the Left will use the privileges and immunities clause to justify welfare. In any event, the right thing to do is to overrule the Slaughterhouse case and bring back the privileges and immunities clause. The Left has already made huge inroads towards a welfare society even without the clause. Although, I find it inconceivable there is any Constitutional argument to defend welfare with or without the privileges and immunities clause, no one will fight it. Why? Because welfare is about buying votes and it is not really about helping the poor. As we have seen with ObamaCare: Once a welfare program is created it is essentially impossible to get rid of it even if it poorly designed, inefficient, and costing taxpayers more than it should. More and more citizens feel entitled to more money even if they do not deserve it. The sense of entitlement has stemmed from how we have demonized lawful and hardworking individuals and companies. In essence, the poor are poor because of corporations and wealthy individuals. In modern America: The poor are always right and the rich are always evil and wrong.

Saturday, December 9, 2017

The End of Economic Freedom (Part V)

Let’s evaluate a few examples of how the rational basis test works against workers and businesses. In Williamson v. Lee Optical (1955), the Court upheld an Oklahoma law prohibiting Lee Optical from providing a lawful business option to the public (doing what Lens Crafters does today). The Court said the law does not have to make sense to have some rational basis. Licensing is a key impediment to new opportunities for workers. Licensing was held Constitutional in Dent v. West Virginia in 1889 as a means to protect the public welfare from incompetent workers and businesses. In Yick Wo v. Hopkins (1886) the Court held that licensing rules in the California laundry business were unconstitutional because they targeted mostly Chinese Americans and immigrants (even though the licensing regulation had a purpose to protect the public from fires). In New State Ice Company v. Liebmann (1932), the Court correctly held that an Oklahoma law limiting those in the Ice business was unconstitutional. Louis Brandies dissent in this case has gotten much attention because his opinion fosters federalism by saying States should be allowed to experiment with laws without judicial interference. Brandies opinion, moreover, concludes that States should be allowed to find what laws work and which do not. This may be true, but as Justice Sutherland noted in his majority opinion: States cannot experiment with Liberty and the fundamental rights of citizens. But since the New State Ice Company ruling, licensing laws have gotten out of hand. Consider a Louisiana licensing law for florists? How does this protect the public health and safety of citizens? The Louisiana courts held it prevents people from scratching their fingers on wires that hold floral arrangement together. Yes, the Courts merely invented some rational (or irrational) reason to uphold the law. Taxi licensing laws work to exclude others from entering the business by making it cost and training prohibitive. The same can be said about fields such as cosmetology. When the Tenth Circuit ruled in Powers v. Harris that the government can regulate businesses by providing economic benefit to one business at the expense of another, even without a public interest to promote safety or health. In Powers, the Oklahoma government regulated coffin sellers and the court held that those retailers selling coffins over the internet without following licensing and training regulations where in violation of the law. This case is in conflict with the outcome in a similar case in Tennessee (Craigmile). Hence, it may be up to the Supreme Court to rule on which is correct (I am not holding my breath).

When licensing is not sufficient to limit business opportunities and protect preferential businesses then there are methods such as zoning laws. In one California case a person who sold furniture in the city limits was closed down because the zoning laws only provide for the sale of furniture in downtown (protecting the downtown monopoly). In other words, government could “limit competition, raise costs to consumers, and prevent job creation” to protect a monopoly. The Motor Vehicle Franchise Act in Illinois allows government bureaucrats to reject any new franchise car stores from competing with established local car stores. A study of this law showed that customers payed nearly 10% more in states with these types of protective laws. Zoning laws are not much different than environmental regulations that put farmers and companies out of business. Consider the example where the government shut off the water supply to California farmers so the state could protect a fish. In other words, the rights of fish are more important than the rights of farmers and their families. In fact, the government has protected a small wetland from the right of a landowner to build a home or business. I find it odd that liberals will protect dirt, but they will not protect a human being or even a fetus.

The Agriculture Adjustment Act (AAA) was passed by Congress during the New Deal and is still used today to regulate most farming items. It was first found Constitutional when the Court held in Wickard v. Filburn (1941) that Congress could regulate how much wheat a farmer could grow on its land (including how much can be grown to feed their families and livestock). In fact, to drive the cost of farm products up, the government still regulates how much a farmer can grow. Remember, this was during the Great Depression and people were starving. A more modern example of egregious AAA power is the raisin market. Today, the government confiscates up to half of all raisin crops to distribute them as they see fit (to schools for instance). When farmers filed suit saying the AAA violates the Fifth Amendment’s Takings Clause (government cannot take private property without just compensation), the Court held this thievery did not constitute a taking. For a big business raisin farmer, the effects of AAA regulations are much less extreme than on a small raisin farmer. Hence, AAA regulations stifle competition, protect big business farmers, drive up costs for Americans, and stifle innovation and job growth.

Lochner v. New York (1905) is regarded by both the Left and Right as one of the worse decisions in Supreme Court history. Why? Because the Court elevated the fundamental “freedom of contract” right not found in the Constitution. The Court said New York could not place work hour limits on bakery workers because both employer and employee have a freedom of contract over the right to earn a living to support their families. Both the Right and Left are hypocrites because they routinely elevate fundamental rights not found in the Constitution: Privacy, Right to Bodily Integrity, Procreation, Gay Marriage, Sex, Right for Parents to make Decisions in their children’s upbringing, and so on. Besides, freedom of contract and the right to earn a living have always been considered basic rights or privileges and immunities outlined in Corfield v. Coryell and implicit in the Fourteenth Amendment. This country needs more, not less, decisions that protect not just economic rights but all rights. Finally, the Ninth Amendment says that rights not included in the Constitution should not be disregarded or disparaged. Lochner was overruled in West Coast Hotel v. Parrish in 1937 and economic freedom has not seen the light of day since.

The unfortunate nature of Supreme Court precedent is that there are no longer any economic rights such as the freedom of contract or the freedom to pursue a lawful occupation without government interference. Because of this, companies (large or small) and individuals pursuing economic freedom do so under the guise of other Constitutional protections. For example, in Metropolitan Life Insurance v. Ward (1984) the Court held that an insurance tax on out of state insurance policies to protect in state companies was unconstitutional because it violated the equal protection clause of the Fourteenth Amendment. States have upheld statutes that make it illegal for stores that sell “sex toys”. In these cases, stores do not argue economic freedom, but instead they failed to successfully argue the right to privacy found in Griswold v. Connecticut. Using Griswold precedent, the Court in Lawrence v. Texas found the right to sexual freedom between two consenting adults in private. Still, most states and courts will deny people the right to “sex tools” over moral concerns even though those instruments will be used in private.

Thursday, December 7, 2017

The End of Economic Freedom (Part IV)

If a person’s civil rights are violated by the government, the Court will uphold a penalty in the form of compensation (Owen v. City of Independence Missouri). Another example is the internment of Japanese Americans during WWII. The United States would later say that policy was wrong and the government would pay family descendants for damages. However, if your economic or property rights are violated, the government usually contests these cases by saying it owes nothing. A lot is riding on the St. Tammany Frog case the Court will hear this term. In this case, the government wants to confiscate a portion of a person’s property without just compensation to turn it into a frog habitat. Unfortunately, the frog habitat they want to build is for a species of frog that has been extinct from that area for 50 years. What’s worse, to build the habitat the government seeks to chop down trees and maintain the area by burning brush each year. Obviously, the government is exploiting the owner. This is outright extortion. Consider how the Liberal Court has elevated “privacy rights” that has led to “sexual” privacy rights as well as abortion. But the same Court cannot explain why they disparage rights enumerated in the Bill of Rights such as property rights. As Clarence Thomas noted in his Kelo dissent: privacy rights in the home are protected, but unfortunately the home is not a protected property right.

The Court’s changing interpretation of the Contracts Clause has had a huge effect on how government regulates monopolies. The Contract Clause protects (minority) lenders against breach of contract by borrowers (majorities) to repay loans. In other words, any laws which abolish debts would be unconstitutional. The Founders added the Contract Clause in a response to Shays Rebellion where those facing foreclosure took up arms to fight local governments and lenders in Massachusetts. The Founding principles outlined in the Contracts Clause can be found in the famous case Fletcher v. Peck (1810) delivered by Chief Justice Marshall. However, by the 20th Century courts view of the Contract Clause had changed for the worse. In New York, rent control ordinances were put in place to void contractual leases between renter and landlord. In effect, renters were granted below market value rents at the expense of the landlord. This was beginning of the philosophy where “contracts are made subject to the exercise of the power of the state.” Initially the government changed private contracts under cases of extreme emergencies such as in Blaisdell v. Home Building and Loan Company (1933). The Court provided that the state could alter contracts (in this case a lease) for the public good when facing an emergency such as the Great Depression. But the Court would routinely use the Blaisdell precedent to change a variety of private contracts even when there was no emergency of any sort. The Contract’s Clause saw a brief revival in the 1970s (United States Trust Company v. New Jersey and Allied Structural Steel v. Spannaus) but it did not last long. For instance, many municipalities would place wording in contracts with vendors such as they had to adhere to any future laws and statutes. Hence, municipalities could merely change laws to force vendors to adhere to economic regulations which voided previous agreements. The Contract Clause and Ex Post Facto Laws were written to prevent exactly this type of government interference. Under these types of contractual interpretations by the Court, it was easy for government to not only control so called monopolies (lawful companies seen as evil because they are big) but any company. Consider Munn v. Illinois in 1876. In this case, the government changed a rent contract between farmers and owners of silos to store grain. The government decreased the rent silo owners could charge farmers to store grain. Farmers and silo owners were not monopolies, but yet the Court upheld regulatory price control and voided a perfectly good contract. Munn was followed with extensive government contract interference and ticket price control regulation for railroad monopolies. Although Munn declared that government regulation was only acceptable if it affected the public interest, that would change in Nebbia v. New York (1934). In Nebbia the Supreme Court held any regulation that was “rationally related to a legitimate government interest” was Constitutional. In Nebbia the Court upheld a New York law that made it illegal to sell a quart of milk for less than nine cents. The purpose may have been noble: to protect small manufacturers, but this law was flawed for many reasons. First the law had the opposite effect because it stifled competition, efficiency, and innovation in the market place. Secondly, during the Great Depression this law forced the average household to spend more on milk.

The rational basis test used in Nebbia has been used by courts to decide cases ever since this ruling. There are many issues with the rational basis test. First, it places the burden of proof on those fighting the government regulation. This would be analogous to courts holding defendants as guilty until proven innocent. This would place the burden on defendants to prove their innocence. Secondly, judges can make up and invent any rational reason to uphold a law that where not even introduced in the case. Finally, the courts have never defined what a legitimate government interest is or was. For these reasons, courts using rational basis tests very rarely strike down any law or statute. In 1938, the Court put a few restrictions on the rational basis test in United States v. Carolene Products. For instance, a state law affecting minorities, voting rights, and speech would face higher scrutiny. But many fundamental rights such as property, economic freedom, and religious rights faced a rational basis test. For instance, in Cleburne (1985) and Romer (1996) the Court held state laws did not pass the rational basis test because minority groups such as the mentally ill or the gay community would not benefit from the laws. But the Court fails to protect other minorities such as the economic rights for small business owners the same way. In essence, the Court promotes monopolies and less competition by failing to protect economic rights.

Sunday, December 3, 2017

The End of Economic Freedom (Part III)

The biggest disappointment of the Sherman Anti-Trust Act is it does not apply to government monopolies as decided by the Court in Parker v. Brown, 1943. In other words, the government may monopolize an industry or any sect of the economy (including healthcare). The Parker precedent was used to exempt government from the Anti-Trust Act in United States Post Office v. Flamingo Industries and Sea Land Service v. Alaska Railroad. The Local Government Anti-Trust Act of 1984 reversed previous precedent also making local governments exempt from monopoly prosecution. If that is not bad enough, private companies can lobby the government to be immune from monopoly prosecution. It is illegal for companies to collude to form a monopoly, but it is perfectly legal for companies to collude with the government to form a monopoly. In Loewe v. Lawler the Court held the Anti-Trust Act applied to union organizations, but the Clayton Act of 1913 made unions and their price fixing and inflation of wages exempt from Anti-Trust Laws. The American Bar Association (ABA) is a perfect example of a union run monopoly that is immune to the Anti-Trust Laws. The bottom line, the United States handles monopolies completely opposite as how they were handled by early courts in the United States and England. By doing so, this means the United States is violating the freedom of worker rights of millions of Americans who may want to start a business but are not allowed because it conflicts with a government monopoly.

The United States (Supreme Court) handles monopoly cases similar to how they handle Fifth Amendment Takings cases (the government can take private property for public reasons only with just compensation). However, the Court has allowed takings from private citizens for private individual or corporate use throughout U.S. history. In early railroad takings cases (private companies) the Court allowed this action because it could eventually be used for public purposes. But in Kelo v. New London (2005), the Court allowed the taking of private property strictly for private reasons. In other words, takings provide monopolies and the government further advantages over a vast majority of companies and individuals. The Court has expanded the Takings Clause by changing the meaning of “public use” in the clause to mean “public benefit”. During this 2017 term, the Court will hear another important Takings Clause case that deals with patent protections. Congress passed the America Invents Act (AIA) with good intentions. The goal of AIA was to stop patent abuse including patents that are defined too broadly and to eliminate those filings that are not true inventions in need of patent protections. However, like anything the government creates, the AIA has become another politically motivated office and is in many cases denying inventions well deserved patents. The AIA has, of course, made patent filings more expensive and made the filing process longer, convoluted, and cumbersome. But denying patents for political or incompetent reasons is in essence taking property without just compensation since anyone can use ideas that are not protected free of charge. Below is a brief history of key Takings Clause cases.

In 1871, in Pumpelly v. Green Bay Company the local courts found that flooding a citizen’s property while building a canal constituted a taking. In Mugler v. Kansas local courts used the takings clause to protect the public health and safety to uphold a law prohibiting making and selling alcohol without a license. In Loretto v. Teleprompter Manhattan CATV Company the Court held that compensation was necessary for placing cable equipment on private property (even if it occupied a very small space). In Lucas v. South Carolina Coastal Commission, the Court held that denying a person the right to build on private property constituted a taking. However, the Court said there was a difference between “temporary” and “permanent” takings (technically, it should not matter, a taking is a taking). For instance, in Yee v. Escondido, a California law prohibiting mobile park owners from evicting tenants was upheld by the Court. The Court has also upheld “delays” as legal takings without compensation. In the Tahoe-Sierra case the Court held government regulations which delayed building on private property for decades as legal takings. The Court defined regulatory takings guidelines in Penn Central v. New York City. The Penn Central test is bogus because it has never been used successfully by a party to obtain compensation for regulatory takings. The government routinely uses regulation to take private property to avoid paying compensation. Governments use zoning laws, building permits, and other actions to deny or make it monetarily impossible for people and companies to build on privately owned property. Some argue that the Founders did not account for such changes in our laws in the Constitution. That is not true! For example, illegal search and seizure laws have constitutionally adapted and evolved with technology advances in wiretapping and infrared technology. The same should be said of our economic and property rights. These rights should not be disparaged simply because the government has created new types of measures to circumvent the Constitution. Judges cannot make decisions to take a person’s property without compensation simply because the owners plan for the property is lawful but “unreasonable”. That is not for judges to decide. It is also not an excuse that the government simply cannot afford to pay compensation for takings and still achieve its objectives. But this is exactly what is happening. Colorado has a new law that protects the “rights of nature”. This law will surely be abused by liberals to deny economic and property rights. The government’s latest reason to take private property without just compensation is what I call “quid pro quo takings”. In others words, the government will provide a building permit if and only if the owner reciprocates by donating a parcel of land for some government purpose. The Court has ruled against this practice in Nolan v. California Coastal Commission and Dolan v. City of Tigard. But in these cases, the government did not have a good or compelling government reason to take the property. In other words, since the government had no real plan for what to do with the land or that government objectives could have been garnered without a taking, the Court held this process was extortion. For instance, in Dolan the government wanted a small strip of land to capture any water runoff from construction of a new parking lot before it went in the neighboring river. But this objective could have been met by having Dolan construct a parking lot so water will properly drain away from the river. However, as in other types of takings cases, the Court has upheld the “quid pro quo” extortion tactics of the government. In Rockleshaus v. Monsanto the government made Monsanto give up its chemical formulas to obtain a business license.

Thursday, November 30, 2017

The End of Economic Freedom (Part II)

James Madison saw government created monopolies as wicked because they limited the economic freedom for individuals to pursue a profession protected by the government. Madison views of monopoly were adamant during his protest against the creation of a national bank. Madison’s view grew from English Law and the views of Scottish philosopher, Adam Smith. Smith viewed economic freedom “the most sacred and invoidable” rights and monopolies were a “manifest encroachment upon the just rights of both the workman, and those who might be disposed to employ him.” In 1602, the famous English lawyer, Sir Edward Coke, fought a card making monopoly created by King James I in Darcy v. Allen. This court held that a government created monopoly was illegal. Coke would win the rift between King James I when other courts would make similar rulings against government monopolies in Weaver of Newbury’s Case, the Case of the Bricklayers, and Colgate v. Bacheler. It is important to note that the meaning of the word monopoly and corporation was similar in these early English decisions. This early definition of corporation has caused a great deal of the modern animosity that is held toward law abiding companies. For example, a great number of persons still do not agree that Corporations are people and are protected under the Constitution as such. This concept was first introduced by the Court in Santa Clara County v. Southern Pacific Railroad (1886). Corporation own property, can sue and be sued in court, and pay taxes like citizens. Besides, there is no way to protect the rights of investors without treating a corporation as a person.

The Supreme Court was challenged with some monopoly cases under the “Contracts Clause” of the Constitution early in our history. In Dartmouth College v. Woodward (1819) Chief Justice Marshall held that the state could not change a contract charter that would make Dartmouth College a public institution instead of a private one. In Charles River Bridge Company v. Warren Bridge Company (1837), the case involved a contract dispute between those who built the toll road over the Charles River and the State of Massachusetts. Forty years after the Charles River bridge was built the State of Massachusetts made a similar contract with the Warren Bridge company: to build a free bridge parallel to the Charles River Bridge. Charles River Bridge Company felt the Warren Bridge contract violated their monopoly contract with the State citing Dartmouth College v. Woodward (States cannot change a contract or charter). However, Chief Justice Taney said the State of Massachusetts can create new contracts with whomever they want so long as the original contract did not specifically state it was contracting a monopoly to one company. In other words, Charles River Bridge set “precedent that corporate charters would not be read as including a prohibition on competition unless the charter explicitly said so.” In fact, the Taney precedent in Charles River Bridge was used to allow states to revoke monopoly contracts in Butcher’s Union Slaughter House and Live-Stock Landing Company v. Crescent City Live-Stock Landing and Slaughter House Company (1884) and Stone v. Mississippi.

The Slaughter House Cases of 1873 was probably the most important but disastrous monopoly case. In this case, the Court held a Louisiana law to monopolize New Orleans slaughter houses Constitutional even if it denied workers the right to pursue a lawful profession. This case was very damaging because it basically wrote the newly enacted “Privileges and Immunities” clause out of the Fourteenth Amendment. The “Privileges and Immunities” clause was passed to protect the rights outlined in the 1866 Civil Rights Act which echoed those protected rights outlined by Justice Washington in Corfield v. Coryell a few decades earlier. Among those rights was the right to pursue a lawful profession without government interference. However, the Slaughter House decision regressed American law back to pre-Civil War interpretations over economic rights and citizenship disputes.

The Sherman Anti-Trust Act (1890) was originally designed to stop all government monopolies and any public monopolies that used unlawful methods to keep competition out of its economic market. The law was not designed to eliminate or dissolve merely powerful big corporations who were acting legally. But that was exactly what happened. Consider the 1945 anti-trust case against ALCOA (aluminum manufacturer). In this case, Justice Learned Hand said that the Anti-Trust Act was not enacted to control only dishonest behavior, but honest legal behavior as well. Alan Greenspan would call the ALCOA decision as “codemn(ing) [ALCOA] for being too successful, too efficient, and too good a competitor.” After all, ALCOA was not price gouging, in fact, they were providing customers everyday low prices for their products. Since ALCOA was making a profit no one could even accuse them of predatory pricing (to lower prices below profitability margins to push out competitors). The Supreme Court has decided a few predatory pricing cases correctly: Matsushita Electric v. Zenith Radio and Brooke Group v. Brown and Williamson Tobacco. In these cases, the Court held without a viable threat of a monopoly, predatory pricing is legal. Besides, no company could continue predatory pricing for very long without hurting their bottom line. One can ask, is any price cut on a product or service illegal because it causes a customer harm? Of course not, sales are available on a daily basis between competitors. Government regulation of lawful companies simply because they are big is wrong: it stifles innovation, raises prices, and decays job growth for absolutely no reason. ALCOA is a perfect example showing the difference between a lawful public monopoly and unlawful predatory government monopolies.

Even when companies were not monopolies, the government found ways to classify them as monopolies to break them up. In 2003, Nestle tried to purchase Dryer’s Ice Cream. Although this would not create a monopoly for ice cream by any stretch of the imagination, the government classified the merger as a monopoly on “super-premium” ice cream to nix the merger. The government did the same to nix the Whole Foods and Wild Oates Supermarket merger by classifying it as a monopoly on “premium natural and organic supermarkets”.

Saturday, November 25, 2017

The End of Economic Freedom (Part I)

“The pursuit of happiness” in the Declaration of Independence has many meanings including the right for every person to pursue a lawful profession (this is part of economic freedom). I do not think that anyone would argue that our happiness is heavily dependent on how happy we are with our profession. That is why people will change jobs routinely: they are in pursuit of happiness. The United States has been at “At Will Employment” nation since its inception. This means employers and employees are allowed to terminate their work contracts without any reason (except for reasons of discrimination). This concept was outlined in the important Supreme Court decision in Adair v. United States (1908). All this being said, the United States has been moving towards a “job security” nation similar to Canada, Sweden and Norway. Some examples of this can be seen through unionized professions which protect incompetent employees from any type of lawful termination including being lazy and disruptive. It is a huge misconception that job security and the ever-increasing termination laws protecting employees are actually good for employees. Simply put, workers do not benefit from laws and regulation that in the long run make it harder and more expensive for employers to hire. And what’s worse, the inefficiencies and waste from job security programs are passed on to the consumer in the way of higher prices, less innovation, and lower quality products. The rise in the “temp” workforce is a direct response to tougher termination laws and government regulation. Temporary workers provide cheaper options for employers and come with less regulatory employment rules and therefore can be terminated easily without facing lawsuits. Temporary workers do not receive any corporate benefits, but the California Supreme Court changed that in Vizcino v. Microsoft. Hence, courts are onto the corporate “temporary worker” concept and ready to shut down these “at will employment” opportunities.

Tort cases seeking punitive damages from companies costs them about 1 trillion dollars annually or about 5% of the economy. For example, “public nuisances” laws have been used to target tobacco, gun, car makers, drug manufactures, and paint manufacturers. In fact, many of the plaintiffs in these cases have faced no harm or damages from any of these companies. Hence, to many, suing corporations is for a personal benefit, not for the benefit of the public. Frivolous lawsuits are common and most companies would rather settle than face enormous fees by going to trial. California’s Unfair Competition Law has triggered thousands of frivolous lawsuits such as planes not having enough leg room or disputing the service fee for hotel room service. Although many lawsuits are dismissed and Supreme Court cases such as BMW v. Gore limit damages to realistic sums of money, the cost on companies is extreme and most of that cost is going directly to the customers in the form of higher prices and less services. The American Disabilities Act (ADA) is part of the Civil Rights Act. It costs business millions each year to upgrade its buildings to meet this law. I do not have anything against making buildings wheel chair accessible but the government should subsidize what it mandates instead of forcing costs onto businesses and consumers. The ADA has made it impossible to fire anyone because things like laziness, lack of concentration, alcohol and drug addiction, and disruptive behavior are all now considered to be disabilities for which the company must seek treatment options to help employees afflicted with such disorders. But these laws go one-way. For instance, an employee who fails to be responsible by taking his medications or has alcohol or drug relapses still cannot be fired. Discrimination lawsuits are up over 5000% over the last 50 years. Person’s in wheelchairs have filed suit against movie theatres because their seating locations are not favorable. And then there are the discrimination lawsuits against bars that offer benefits for women such as ladies night. Every employee has a disability excuse (there is now a medical term for any type of behavior) and therefore employees resort to discrimination lawsuits against their employer when they are let go. While employers are held to incredibly difficult standards, workers are free to be irresponsible and unaccountable for their behavior in the workforce. When one in twenty dollars of economic activity is due to lawsuits, then we have really entered the age of needing tort reform. We need to reestablish equal employer / employee rights and not one-sided laws protecting unproductive employees at the expense of businesses and consumers.

People probably enter into a hundred contracts every day: anything we purchase, work, our home, our utilities, cable, phones, marriage, schools, parking, and so forth and so on. There are three reasons a court may void a contract: Public policy reasons, unconscionability, and bargaining power inequity. But the courts have used these reasons to void perfectly good contracts where there has been no coercion or exploitation of any of the parties partaking in the contract. Take, for example, bargaining power inequity: Parties in exact equality have no reason to enter into a contract. Hence, there must be some inequity for party A to enter into a contract to obtain more of what party B has. For this reason, many bargaining power inequity rulings are bogus. Public policy reasons lead judges to input personal bias and opinions into decisions. For example, in a Massachusetts surrogacy case (R.R. v. M.H) the Court sided with the surrogate mother who breached her contract and kept the baby. The judge ruled it is not normal public policy to sell babies. I find that odd since it is now normal public policy to abort a baby. This is a judge’s opinion, he is not following any law. Judges also use unconscionability to input biases and personal opinions. Consider the 1965 Washington DC case Williams v. Walker-Thomas Furniture Company. In this case, the court ruled in favor of a person who breached their contract by defaulting on their furniture payments. The court ruled that the furniture store could not repossess the furniture per the contract. In other words, the furniture store was out the remaining amount due in the contract. In this decision, the court had empathy toward the plaintiff because she was poor. But the court’s decision would affect hundreds of poor people living in the same neighborhood negatively. In response to the decision, the furniture store reduced credit levels and raised prices to cover lawsuits where they could not repossess items for breach of contract. California courts have barred companies like Circuit City from using arbitration as a means to solve employee disputes. Instead, courts want companies to face lengthy and more expensive class action suits instead of settling disputes in arbitration. Once again, these actions force companies to cut employment, reduce wages, or pass any increased legal costs onto the consumer.