Usher Political Economy (Blackwell, 2003)

Other aspects of the constitutional entrenchment of property rights are illustrated in Lochner v. New York (US Supreme Court, 1905) about the regulation of the workplace and Pollock v. Farmers’ Loan and Trust Co. (US Supreme Court, 1895) about income tax. In both cases, the Supreme Court interpreted the constitution as imposing a more stringent constraint on public policy than was envisioned by the legislature. Lochner was about the constitutionality of a New York law prohibiting bakers from working more than 64 hours a week. A majority of the judges of the US Supreme Court declared the law to be in violation of the US constitution, arguing that the ostensible purpose of the law, to protect public health, was no more than a front for the redistribution of income. In the words of the judgment, “It is impossible for us to shut our eyes to the fact that many of the laws of this character, while passed under what is classed to be the police power for the purpose of protecting the public health or welfare are, in reality, passed from other motives.” The precedent in Lochner lasted until the 1930s when the court reversed itself on a great deal of social legislation. By then, the prevalent opinion in the United States and Canada was that the benefits to be derived from the institution of private property were not placed in jeopardy by the regulation of hours and wages. Many still believed that the regulation of hours and wages was unwise and that the common good would be best served by leaving that aspect of the market alone, but much of the heat had gone out of the debate because few believed any longer that the regulation of hours and wages was likely to destroy the free market altogether. A consensus seems to have emerged that such social legislation is not forbidden by the constitution and is best left for the legislature to establish or disestablish as it sees fit.

It is hard not to believe that the judges’ opinion in Pollock on the constitutionality of the federal income tax was conditioned by their opinions about the desirability of the tax. The judgment was ostensibly about whether the income tax is a direct tax. Section 9 of article 1 of the US constitution stipulates that “No capitation or other direct tax shall be laid unless in proportion to the census or enumeration herein before directed to be taken.” In Hylton v. United States (1796) the court had decreed that there are only two direct taxes, “capitation or poll taxes . . . and a tax on land.” At various times in the nineteenth century, the federal government had successfully levied an income tax. Nevertheless, a bare majority of the court in Pollock decided that, as the income tax is imposed on income from land as well as from capital and labor, it must be a direct tax in violation of the constitution. The income tax remained unconstitutional until 1913 when, presumably in anticipation of war, its constitutionality was restored by the sixteenth amendment to the constitution, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”

A distinction was drawn in the introduction to this book between two sets of rights, property rights – ownership of land, dwellings, factories, and their own skills – that people possess unequally, and civil rights – the right to vote, to free speech, to practice one’s own religion, and so on – that people possess equally. Many of the law cases we have been examining can be looked upon as pertaining to disputes over the boundary between these two sets of rights. Lochner upheld the right to make contracts against the right to a modicum of leisure. Pollock defended what the court saw as a property right in refusing to draw a distinction between ad hominem expropriation

and a systematic requirement for wealthy people to pay more than a per capita share of the cost of government. The subsequent overturning of these cases was a redrawing of the boundary between rights, enlarging the scope of civil rights and reducing the scope of property rights accordingly.

Jurisdiction of different levels of government

Powers of the different levels of government may or may not be constitutionally entrenched. The United Kingdom and France are “unitary states” with no constitutional sanction for subordinate levels of government. To be sure, the United Kingdom and France have county and municipal governments, but these have no constitutional standing. County and municipal governments may be altered or abolished altogether at the pleasure of the central government. Canada and the United States have “federal governments.” The powers of provincial and state governments are set out in the constitution, so that, in Canada for instance, the federal government has no jurisdiction over education or language because these are reserved in the Canadian constitution for the provincial governments. Municipal governments, on the other hand, have no constitutional standing and are entirely under the authority of the provincial governments.

Federalism is a child of taste, fear, and greed. Federal government tends to be established when people in different regions want their governments to do different things, most importantly to protect and foster regionally concentrated language. With nation-wide majority-rule voting, any group constituting a majority within a region but a minority in the country as a whole is placed at the mercy of the majority unless that group’s special concerns are protected by the constitutionally guaranteed power of a regional government. This consideration is paramount in Canada where the protection of the French language by a constitutionally sanctioned provincial government was an absolute requirement for Quebec’s participation in a united Canada. No constitution can supply absolute protection. A constitution can at best supply a considerable degree of security because it is difficult to amend and cannot be overturned without undermining the legitimacy of the entire government. Federalism may assuage the citizen’s fear of predatory government because it may be more difficult to enlarge the powers of government or to replace democracy with dictatorship when there are many governments to contend with, rather than just one. Alternatively, when small countries amalgamate into one large country, federal government may emerge for no better reason than to perpetuate the spheres of authority of the bureaucrats and politicians of the original countries.

Under a federal system of government, where the powers of the different levels of government are entrenched in a constitution, the Supreme Court cannot escape the obligation to resolve disputes over the exact boundaries between domains of authority. There is no other way for such disputes to be resolved. Jurisdiction over unemployment insurance was unassigned in the original Canadian constitution of 1867 because there was at the time no unemployment insurance and none was contemplated. Later on when unemployment insurance was introduced, the Supreme Court was obliged to decide whether it belonged under federal or provincial jurisdiction. The court had no

option other than to torture the language of the constitution into a confession on the matter. It had to decide one way or another. Unemployment insurance might have been assigned to the provinces under item 13 of section 92 of the Canadian constitution granting the provinces jurisdiction over “property and civil rights in the province,” or it might have been assigned to the federal government under the preamble of section 91 granting the federal government authority to “make Laws for the Peace, Order and Good Government of Canada.” For reasons beyond my understanding, it chose to assign jurisdiction over unemployment insurance to the provinces. Subsequently, unemployment insurance was reassigned to the federal government by a constitutional amendment with the concurrence of the federal government and all the provincial governments.

The Canadian constitution is also silent about secession, with no explicit provision for the separation of a province. The closest the Canadian constitution comes to a provision about secession of a province is that any and every clause in the constitution can be amended by the unanimous consent of the federal government and the governments of all of the provinces, with no recourse to a direct vote by citizens. Unanimity of the provinces is widely believed to be at once too stringent a condition for secession and wrong in itself as it places no weight on popular opinion. Nor is there any reference in the constitution to the referendum as a vehicle for constitutional change. The matter became important with the emergence of a strong separatist movement in the province of Quebec. The history of Canada since the 1980s would suggest that most Canadians would be prepared to abide by the outcome of a referendum if the majority for separation were substantial and if the terms of separation were satisfactory.

It is in the interest of all Canadians – in Quebec and in English Canada – that the fate of Quebec be determined within a framework of law. Break-up of a country may be peaceful as in Czechoslovakia or violent as in Yugoslavia. A struggle over secession in Canada is more likely to be peaceful if Canadians can agree in advance upon the rules than if no such agreement is reached. Conflict is less likely to arise if it is known in advance whether and in what circumstances secession would be resisted by force, what the territories of the successor countries would be, how the responsibility for the Canadian national debt would be divided and what percentage of the national vote is required to trigger separation.

In Reference re Secession of Quebec (1998), the Canadian Supreme Court accepted a request from the federal government to pronounce on the legitimacy of the separation of Quebec. Specifically, the Supreme Court has been asked these questions:

(1) Can Quebec unilaterally separate under the Canadian constitution? (2) Can Quebec unilaterally separate under international law? (3) If there is a conflict between the Canadian constitution and international law, which has precedence? This case placed the Supreme Court in an exceedingly difficult position. A degree of judicial activism was required to establish law where there is none now and where no government is empowered by the constitution to create it. Oddly enough, the Supreme Court refused to provide precise rules about whether, when, and how Quebec may separate from Canada. The Court decreed instead that a vote for separation “with a clear majority on a clear question” in a referendum in Quebec would trigger a “duty to negotiate” upon Quebec and the rest of Canada, with no clear presumption about what the outcome of that negotiation would be.

Judge-made law

Ideally, legislation and adjudication can be kept in two distinct compartments. The legislature makes laws, and the courts apply them. In practice, legislation and adjudication can never be kept entirely apart. There is, first, an unbridgeable gap between the text of the law and the facts of the case at hand. Words denote things imperfectly. Consider, for example, the boundary between patentable inventions and unpatentable scientific principles. How well along to commercial viability must a discovery be before it can be classified as an invention? Who gets the patent when one scientist announces a vague but probably feasible design on day 1 and another scientist announces a similar but better design on day 2? Can a patent on one invention block a second invention which is in some sense dependent on the first? Can a species of animals be patented? It can, but that was uncertain until the courts decreed so. Rightly or wrongly, these matters have been settled by the patent office in the first instance, but ultimately by the courts. A vast doctrine of administrative law has grown up around the question of when it is appropriate for the courts to second-guess or overturn the decisions of administrative tribunals. Lawyers speak in this context of the “open texture of the law,” of the room for discretion in the case at hand. Some go so far as to argue that the law is “whatever the judges declare it to be,” but the executive and the legislature would make short work of judges whose declarations were too outlandish. Judge-made law is at the root of the expansion of product liability since the 1950s. Over and above the court’s responsibility to clarify the law in its application to the case at hand is its responsibility to challenge the legislature when legislation appears to violate the constitution, to victimize particular people or groups of people, or to threaten democratic government?

The dangers of judicial activism

Every branch of government has its vices: the legislature to exploit minorities, the administration to oppress citizens for the benefit of a ruling class, the judiciary to interpret the constitution in accordance with its own preferences or the prejudices of the social class from which the judges are chosen. Pick nine distinguished old folks, dress them in black robes and wigs, tenure them, venerate them, and you can be confident that, sooner or later, they will do something foolish or evil. We have already discussed cases that some readers may see as foolish or evil, though not all readers may agree which cases these are. I would like to close this chapter with three more.

At the head of most people’s lists of unfortunate decisions is Dred Scott v. Sandford (US Supreme Court, 1857). In 1834, the United States was part slave, part free. Slavery was prevalent in the southern states and disallowed in the north. In that year, a slave named Dred Scott accompanied his master from Missouri, a slave state, to Wisconsin, a free state, and then returned with his master to Missouri. On arriving in Missouri, Dred Scott claimed to be a free man because he had become free on entering Wisconsin and because, once free, a person remains so always. The case gradually worked its way up through the lower courts to the US Supreme Court

which delivered its verdict in 1857, just three years before the beginning of the US Civil War. A number of possible verdicts were open to the Court. It could have accepted Dred Scott’s claim that once free, always free. It could have recognized the de facto situation at the time that migration from a slave state to a free state confers freedom as long as the former slave remains in the free state. Instead, it adopted the extreme pro-slavery position that (1) not being a citizen, a slave is not “entitled to sue as a citizen in a court of the United States,” and (2) a slave is property which, like all other property, cannot be seized from its owner in any state of the United States. “The right of property in a slave is distinctly and expressly affirmed in the Constitution . . .

the Act of Congress which prohibited holding and owning property of this kind in the territory of the United States north of the line therein mentioned, is not warranted by the Constitution and is therefore void.”

One can only speculate about the consequences of this decision. Ten years afterwards, slavery was abolished throughout the United States, but the abolition was at the cost of a civil war more bloody and terrible for the people of the United States than any other war in its history. Since that war, it has been asked, over and over again, whether the war was really necessary. Slavery was at that time being abolished throughout the world, in Russia, in the Caribbean, in South America. In many places, abolition was effected peacefully by buying out the slave holders. If slavery is permitted in a country, and if slavery is evil, then everyone in that country, slaveholder and non-slaveholder alike, is guilty of that evil, and it would seem appropriate for everyone to share the burden of its removal. That was the procedure in Russia in 1864 where the holders of serfs were compensated by the state. A million innocent lives could have been spared if that procedure had been adopted in the United States too. Why not? Part of an answer may be that, by entrenching a constitutional right to hold slaves, the Supreme Court hardened opinions and made compromise that much more difficult.

Roe v. Wade (US Supreme Court, 1971) struck down state law limiting a woman’s right to an abortion. The issue in this case was not primarily whether abortion should or should not be permitted, but who – the state legislatures or the courts – should decide whether abortion is to be permitted. Though abortion had been illegal in certain states since the founding of the United States, the Supreme Court discovered within the constitution a right of privacy that any ban on abortion would violate. In the words of the court, “The right of privacy whether it be founded on the Fourteenth Amendment’s concept of personal liberty . . . or the Ninth Amendment’s reservation of rights to the people, is broad enough to encompass a woman’s decision whether or not to terminate her pregnancy.” The Ninth Amendment of the US constitution is, “The enumeration in the constitution of certain rights shall not be construed to deny or disparage others retained by the people.” The relevant passage in the Fourteenth Amendment is, “No state shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States; nor shall any state deprive any person of life, liberty, or property without due process of law.” From that, a woman’s right to an abortion was somehow inferred.

Take as a premise that the common good, however defined, is served by a rule permitting a woman to abort her child should she wish to do so. One may hold that view for several reasons. One may believe unwanted children will be badly cared

for. One may fear worldwide overpopulation. One may see in many countries a clear choice between abortion today and the slow death by starvation of children tomorrow. One may see abortion as a human right that no state may overturn. The question remains, to whom ought the decision – to allow abortion unconditionally, to ban it altogether, or to allow it on certain conditions – be entrusted? If the constitution were clear on the matter, if it stipulated specifically that abortion is or is not allowed, or if the court’s interpretation occurred long enough ago that the constitution would have been amended by now had that interpretation been grossly unpopular, then disallowance of legislation might be reasonable. But judicial innovation on grounds as flimsy as those in Roe v. Wade serves only to redirect politics from the substantive issue – what to do about abortion – to the composition of the court. If you care, one way or another, about abortion, you must vote for a president who will appoint judges likely to adjudicate as you wish. And, as judges are, more and more, appointed for their anticipated opinions rather than for their learning in the law, the authority of the court as the impartial interpreter of the constitution, and its capacity to challenge the legislatures over central constitutional concerns, are correspondingly diminished.

RJR-McDonald Inc. v. Canada (Attorney General) (Canadian Supreme Court, 1995) is about the constitutionality of a ban on tobacco advertising. A federal statute (The Tobacco Products Control Act of 1988) prohibited all advertising and promotion of tobacco products and the sale of tobacco product unless its package includes prescribed health warnings and a list of toxic constituents. The Act was struck down by the Canadian Supreme Court as in violation of section 2(b) of the Canadian Charter of Rights and Freedoms: “Everyone has the following fundamental freedoms: . . . freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication.” A majority of the court decreed that “The prohibition of advertising and promotion of tobacco products violated the right of free expression” and added for good measure that “no direct evidence of a scientific nature showed a causal link between advertising bans and decrease in tobacco consumption.” As in the other cases, it is hard to escape the conclusion that judges are simply reading their own preferences into the constitution. Had they chosen to do so, the majority of the court might have concurred with the dissenting minority in drawing a distinction between political and commercial speech, one protected by the Charter of Rights, the other open to regulation by the federal government under the federal government’s authority under the constitution “to make Laws for the Peace, Order and good Government of Canada.” RJR-McDonald has been far less than divisive than Roe v. Wade, but it remains a manifestation of judicial activism and of the willingness of the courts to encroach unnecessarily on the powers of the legislature.

Adjudication and legislation cannot be entirely distinct. All law is “judge-made” to some extent. Judge-made law fills gaps when the text of the law is incomplete or silent. Laws must inevitably be interpreted in the light of the case at hand, or when new situations conform badly to old prescriptions so that – with little guidance from parliament on how to proceed – the courts must seek rules in commercial custom or in their interpretation of natural justice. Much of the common law, including most of the law of torts and contract, is said to be judge-made in this sense. Over and above that, judges must oppose the legislature when the rule of law itself is in jeopardy. This is

explicit in the American constitution which empowers the Supreme Court to strike down legislation causing a person to be “deprived of life, liberty, or property, without due process of law” or “to abridge the privileges and immunities of citizens.” There is a written or unwritten equivalent in every democratic country. Though there is no bright line for the legislature between the establishment of general laws and the provision of harm or benefit to particular people or groups of people, some actions by the legislature would be recognized as beyond its constitutional mandate. Ad hominem taxation of one’s political opponents – a special tax imposed by a liberal government on the ex-cabinet members of the preceding conservative government – is clearly out, and would, one hopes, be effectively blocked by the courts.

Necessary as it is for the preservation of the liberal society, judicial oversight of the legislature is fraught with dangers and difficulties. Constitutions are inevitably vague, and judges are inevitably tempted to fill the interstices of the text with the law as they, personally, would like it to be, encroaching to a greater or lesser extent on the territory of the legislature. Among the dangers in judicial activism are that the judges are wrong in their evaluation of public policy, that politics will be redirected from the election of legislators to the appointment of judges and that courts will lose the moral authority required to uphold the rule of law. Let the courts restrict themselves to the adjudication of civil disputes, to the determination of guilt or innocence of people accused of specific crimes and to an oversight of the legislature extending no farther than is necessary to block victimization or discrimination quite narrowly defined, and the elected officials whose task it is to appoint judges will be content to base their selections on the judges’ learning in the law, for we all realize how much is at stake in the maintenance of the rule of law. Let the courts adjudicate cases in accordance with the law as they believe it should be, and the temptation to appoint judges who see matters “correctly” becomes irresistible.

An inescapable dilemma stalks judicial interpretation of the constitution. On the one hand, preservation of government by majority rule voting requires limits beyond which the majority of the day dare not go. Identifiable minorities, unpopular people, politicians out of office and supporters of the opposition party cannot be silenced, oppressed or denied the opportunity to make a living. Good jobs, property, high incomes, and access to the media cannot be reserved for the supporters of the government of the day. Administrators cannot be allowed unlimited scope to interpret the laws as they please. To some extent, society can rely on the good sense of the voters and politicians not to push their advantages too far. Restraint is aided by a written or unwritten constitution interpreted by the judiciary with authority to void unconstitutional legislation. On the other hand, judges empowered to strike down legislation are almost irresistibly drawn to interpret the constitution in accordance with their own preferences, the preferences of the politicians who appointed them, and the preferences of their social class. There appears to be no thoroughgoing resolution to this dilemma. Judicial influence on public policy may be a fair price to pay for the protection of civil rights. Judicial reticence may be required to preserve the respect for the Court without which it cannot effectively challenge the legislature or the administration.

Running through much of this book is a problem that can be encapsulated in the old question, “Who guards the guardians?” Piracy immediately generalizes to all crime. Police immediately generalizes to the entire government with its apparatus of police,

courts, army, and civil service. The question is whether and to what extent people empowered to enforce law can be deterred from using their monopoly over the legitimate means of organized violence for their own advantage or to victimize ordinary citizens? Throughout most of history, countries have been ruled by kings, emperors, or dictators who, together with their armies and functionaries, constituted a privileged and self-serving ruling class. But not all governments have been like that, and thoroughgoing predatory government is less prevalent today than in years gone by. The problem is to determine why this is so and what safeguards society can install to direct the government’s monopoly of organized violence in the common interest rather than in the interest of some ruling class?

The question was raised in chapter 2, but no answer was provided beyond the general argument that predatory government might be less burdensome to its subjects than the anarchy that all governments must suppress. The question was circumvented in the chapters on markets by the working assumption that property is secure, but a partial answer was nevertheless implied: Where much of the world’s work is entrusted to a competitive market, the centralized bureaucracy can be relatively small and, therefore, relatively less able to dominate the rest of society. Voting is obviously crucial as the only non-violent way of replacing an unpopular government with a better alternative. There is, however, no iron-clad guarantee that the right to vote will not be employed to impoverish and disenfranchise unpopular minorities, that a government in office will consent to its displacement in an election, or that an elected government will not be forcibly overturned. As discussed in chapter 10, much depends on what the administration is called upon to do. The more rule-bound the administration, the smaller the perquisites of office and the less the incentive of the government of the day to perpetuate its authority, especially as successor governments would be correspondingly less inclined to perpetuate theirs.

Another consideration is more directly related to the law. There is a sense in which the question “Who guards the guardians?” is fundamentally misleading, for guardians could only be guarded by other guardians who, in turn, would have to be guarded by still other guardians, and so on ad infinitum. To the question, “Who guards the guardians?” there can be only one answer, “Nobody” unless the guardians can somehow be cajoled into guarding themselves.

Discussion of predatory government tends to personify the ruling class. The army, the police, and the civil service are looked upon as moulded, through self-interest or through fear, into a single personality and a single undivided will. Sometimes, in empires and in extreme dictatorships, that is very nearly so. Normally, government is a great collection of people who may not act in unison. Such a government may be held in check by the division of authority among legislature, executive, and judiciary and because obedience within the hierarchy is conditional.

Rules may be self-enforcing. If everybody believes that I am required to act thus- and-so, that the duly-appointed policeman will punish me if I act otherwise and that the policeman himself will be punished by others for failing to punish me appropriately, then I, in my own interest, must act appropriately for fear of what will happen to me if I do not. But I act confidently within the bounds of my rights, knowing that a policeman who interfered with me would not be backed up by others in the police force or in the rest of the community. The forces of society which support the policeman

against me when I break the law, would, otherwise, support me against the policeman. The prime minister is obeyed when he acts within the bounds of his constitutionally established authority, but the very people who obey the prime minister when he acts within those bounds withdraw their obedience when he does not or when the rules that established him as prime minister transfer the post to somebody else instead. Government requires cohesion. Laws supply that cohesion through mutually enforcing expectations about how people will behave. As the guardian of the rules and with no separate army to enforce its pronouncements against the rest of the government, the judiciary must be seen as issuing signals indicating when the rules would be broken and when the traditional bonds of obedience might be dissolved.