PLUNDER

Frederic Bastiat:

It is absolutely necessary that this question of legal plunder should be determined, and there are only three solutions of it:

1. When the few plunder the many.

2. When everybody plunders everybody else.

3. When nobody plunders anybody.

Partial plunder, universal plunder, absence of plunder, amongst these we have to make our choice.  The law can only produce one of these results. [THE LAW, 61]

I believe this is correct.  Partial plunder seems to characterize most of history.  I say we should choose the third alternative, absence of plunder.  The United States Constitution was a good beginning for a system of political economy that might approximate the third alternative.  Alas, over time the Constitution has been lost [see Barnett, Restoring The Lost Constitution], and our system of political economy seems to have become an excellent illustration of universal plunder.  As you might guess, neither partial plunder nor universal plunder offer paths by which prosperity can be enjoyed by all.

Congress shall make no law. . . .

You might be interested in an interview of Hayek done by James Buchanan. Hayek made the following suggestion about the Constitution:

Well, among the Founding Fathers, there were some who very clearly saw the very point I am making.  And I believe they did try, by the design of the American Constitution, to achieve a limit on their powers.  After all, the one phrase in the American Constitution, or rather in the First Amendment, which I think most highly of is the phrase, "Congress shall make no law. . . "  Now, that's unique, but unfortunately [it goes] only to a particular point.  I think the phrase ought to read, "Congress should make no law authorizing government to take any discriminatory measures of coercion."  I think this would make all the other rights unnecessary and create the sort of conditions which I want to see.

I like the idea.  If you are interested in Hayek's analysis that leads to this suggestion, then you will want to read Law, Legislation, and Liberty (all 3 volumes), and perhaps The Constitution of Liberty as well.

UNCONSTITUTIONAL?

Nicholas Quinn Rosenkranz has recently published a very interesting, and dare I assert important, paper in The Stanford Law Review. He opens his paper with this very interesting idea:

"Two centuries after Marbury v. Madison, there remains a deep confusion about quite what a court is reviewing when it engages in judicial review. Conventional wisdom has it that judicial review is the review of certain legal objects: statutes, regulations. But strictly speaking, this is not quite right. The Constitution prohibits not objects but actions. Judicial review is the review of such actions. And actions require actors: verbs require subjects. So before judicial review focuses on verbs, let alone objects, it should begin at the beginning, with subjects. Every constitutional inquiry should begin with a basic question that has been almost universally overlooked. The fundamental question, from which all else follows, is the who question: who has violated the Constitution?"

Perhaps because I come to study the constitution from the conceptual view of an economist this idea makes perfect sense to me. After all, I recognize that, like Mises, I study human action. Like the neoclassical economist, I study the choices made by an individual.  So, it seems to be in my nature to understand that if the Court declares a statute unconstitutional, the Court is really saying that Congress took an action it did not have the constitutional power to take.  Still, I have to agree with Mr. Rosenkranz that it does seem to be the case that Court opinions, law school faculty, politicians and voters tend to say that it is the statute in question that has some fault.

Is it really important to emphasize who violated the Constitution? I think it probably is very important. Surely it is a good idea for voters to think about the actions of the people they vote for and against. Personally, I can read the Constitution, and when I hear my representative argue publicly that he or she has a power I do not see enumerated in the Constitution I usually vow to vote against that representative in the future.  It seems to me, after all, that when a member of Congress votes to use the power of government in a way that is unconstitutional, that member of Congress is abusing the power of his or her office. 

I think our republican form of government would be improved if our representatives believed it was their personal responsibility to act in a constitutional way.  It seems to me it is possible to hide from this attitude if you are a member of Congress that thinks: "Bummer man, the Court said that law I voted for was unconstitutional."

Consider also that Article VI requires an oath of office for members of Congress. The Oath of Office which is taken by both members of the House and Senate is as follows:

I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.

It seems to me that a member of Congress cannot defend, nor bear true faith and witness to the Constitution if they think it is the statute that is unconstitutional and not their action that is unconstitutional. It is the obligation of each member of the House and the Senate to read the Constitution they take an Oath to defend and be faithful to, and then to act within the bounds of the specific, and enumerated, Constitutional powers granted to their office.  In other words, it seems to me the oath of office makes it the responsibility of each member of Congress not to abuse the power of the office by voting in support of legislation that is inconsistent with the Constitution.

The President also takes a similar oath of office: "I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."  It is not just members of Congress who can act unconstitutionally.  A President that signs a law which is inconsistent with the Constitution is not only violating the constitutional oath of office but is abusing the constitutional power of the office.  I've even read that James Madison believed Presidents would see it their duty to veto Congressional measures that were unconstitutional.  Of course, that doesn't happen today because vetoes are about politics and not about the Constitution.  But why should vetoes be about the Constitution, since it is the job of the Supreme Court to decide which laws, or which parts of laws, are unconstitutional.

It seems to me that by thinking a law is unconstitutional, rather than thinking government is acting to use power in ways that are unconstitutional, we have all come to take the questions of constitutionality too lightly.  Saying "unconstitutional" really should be saying that someone in government, or perhaps many someones, has chosen to abuse the constitutional power of his or her office.

Our Founders and Adam Smith

I guess it has always seemed likely to me that people like James Madison and Thomas Jefferson were influenced in their views of government by the work of Adam Smith.  Perhaps it was the coincidence of the 1776 publication dates for both the Wealth of Nations and The Declaration of Independence.  Or perhaps it was the similarity in conceptual ideas about liberty.  In any case, I just read an interesting article by Samuel Fleischacker which provides evidence that this intuition of mine was not ill-founded:

Adam Smith's influence was thus deeply present in the founders' thought.  This influence was complex, in part because the founders actually read Smith's tome rather than treating it as a hieroglyph for a free trade slogan.  Smith's influence can be seen in James Madison's subtle notion of the relationship between interest and virtue, in the remarks Madison and others made about the link between economic occupation and moral character, and in the trust in ordinary people's judgment that Madison shared with James Wilson, Thomas Jefferson, and some of the other founders.  Smith's importance to American political thought in the 1780s should be taken much more seriously than it has been.  It is remarkable that America has a Constitution that, in the functions it gives to government, the structure its provides for the military, and the strict separation it proclaims between religious and secular powers, fits Smith's conception of politics better than any government of his day.  When this remarkable fact is combined with evidence of significant interest in Wealth of Nations among America's political elite--several years before it received much attention elsewhere--it must be concluded that the relative inattention of historians to the influence of Wealth of Nations on the American founding is an oversight badly in need of correction. ["Adam Smith's Reception among the American Founders, 1776-1790," The William and Mary Quarterly, Third Series, Vol 59, No 4 (Oct 2002), 924-924]

I also found it interesting to realize that Adam Smith was especially interested in what was going on in the Colonies and in America.  He apparently thought this was the most likely place for his ideas to take hold.

The Politics Of Friends & Enemies

Hayek:

While in the tribal society the condition of internal peace is the devotion of all members to some common visible purposes, and therefore to the will of somebody who can decide what at any moment these purposes are to be and how they are to be achieved, the Open Society of free men becomes possible only when the individuals are constrained only to obey the abstract rules that demarcate the domain of the means that each is allowed to use for his purposes.  So long as any particular ends, which in a society of any size must always be the ends of some particular persons or group, are regarded as a justification of coercion, there must always arise conflicts between groups with different interests.  Indeed, so long as particular purposes are the foundation of political organization, these whose purposes are different are inevitably enemies; and it is true that in such a society politics necessarily is dominated by the friend-enemy relation.  Rules of just conduct can become the same for all only when particular ends are not regarded as justification for coercion (apart from such special passing circumstances as war, rebellion or natural catastrophes). [The Mirage of Social Justice, p. 143]

Commerce Clause

Justice Thomas's opinion in the health care case:

I dissent for the reasons stated in our joint opinion, but I write separately to say a word about the Commerce Clause.  The joint dissent and THE CHIEF JUSTICE correctly apply our precedents to conclude that the Individual Mandate is beyond the power granted to Congress under the Commerce Clause and the Necessary and Proper Clause.  Under those precedents, Congress may regulate "economic activity [that] substantially affects interstate commerce."  I adhere to my view that "the very notion of a 'substantial effects' test under the Commerce Clause is inconsistent with the original understanding of Congress' powers and with this Court's early Commerce Clause cases."  As I have explained, the Court's continued use of that test "has encouraged the Federal Government to persist in its view that the Commerce Clause has virtually no limits."  The Government's unprecedented claim in this suit that it may regulate not only economic activity but also inactivity that substantially affects interstate commerce is a case in point.

Right on target!

Order & Power

Hayek:

The ultimate justification of the conferment of a power to coerce is that such a power is required if a viable order is to be maintained, and that all have therefore an interest in the existence of such a power.  But this justification does not extend further than the need.  There is clearly no need that anybody, not even the majority, should have power over all the particular actions or things occurring in society. [The Political Order of a Free People, p. 6]

Not Every Legislative Act Is Law

Justice Matthews for the Supreme Court in Hurtado v People of the State of California, 110 US 516, 535-36 (1884):

But it is not to be supposed that these legislative powers are absolute and despotic, and that the amendment prescribing due process of law is too vague and indefinite to operate as a practical restraint.  It is not every act, legislative in form, that is law.  Law is something more than mere will exerted as an act of power.  It must be not a special rule for a particular person or a particular case, but, in the language of Mr. Webster, in his familiar definition, ‘the general law, a law which hears before it condemns, which proceeds upon inquiry, and renders judgment only after trial,’ so ‘that every citizen shall hold his life, liberty, property, and immunities under the protection of the general rules which govern society,’ and thus excluding, as not due process of law, acts of attainder, bills of pains and penalties, acts of confiscation, acts reversing judgments, and acts directly transferring one man’s estate to another, legislative judgments and decrees, and other similar special, partial, and arbitrary exertions of power under the forms of legislation.  Arbitrary power, enforcing its edicts to the injury of the persons and property of its subjects, is not law, whether manifested as the decree of a personal monarch or of an impersonal multitude.  And the limitations imposed by our constitutional law upon the action of the governments, both state and national, are essential to the preservation of public and private rights, notwithstanding the representative character of our political institutions.  The enforcement of these limitations by judicial process is the device of self-governing communities to protect the rights of individuals and minorities, as well against the power of numbers, as against the violence of public agents transcending the limits of lawful authority, even when acting in the name and wielding the force of the government.

Roberts & No Reason

Justice Roberts in the health care opinion:

The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress's actions have reflected this understanding.  There is no reason to depart from that understanding now. [p. 24]

I agree with the first sentence.  Congress does not have the constitutional power to compel commerce, either interstate or intrastate.  This should be thought to be the case regardless of Congressional actions in support or to the contrary.

I find the conceptual view implied by the second sentence to be of concern.  The second sentence seems to me to imply that if Justice Roberts did believe there was a reason to depart from "that understanding," then he might have been willing to make that departure by way of the Court's opinion at hand.  If this is not implied, then it seems to me Justice Roberts would have chosen to leave this sentence out of his opinion.  I wish he had.

So, why is this of concern?  I think the conceptual view implied by this sentence is that, when useful, the Court should change the way the Constitution is understood by way of Court opinions.  Of course, the proper, constitutional way to change the meaning of the Constitution is to amend the Constitution.  Article V specifies the proper way to change the meaning of the Constitution, and the proper way does not include a grant of power to the Court to do so.

The Court should make the constitutional view clear, nor murky as I think this sentence does.  If it seems appropriate to point out there is no reason to depart from the historical understanding of the Constitution now, then I suggest that Justice Roberts should also add: "and if there was reason to change this understanding, then the Court cannot and will not attempt to do that.  If there is such reason, then the constitutional way of changing the meaning of the Constitution is to carry out the requirements found in Article V."

Sadly, for me, it seems that long ago most of the Justices have come to see their constitutional role in the conceptual way implied by this quote.

The Court & The Commerce Clause

Reading a Court opinion, as I am doing this morning, I am some times bored, some times entertained, some times nauseated, and some times I'm just baffled.  Consider the following tidbits from Chief Justice Roberts in the health care opinion announced yesterday:

1. The Federal Government "is acknowledged by all to be one of enumerated powers."

2. The enumeration of powers is also a limitation of powers, because "[t]he enumeration presupposes something not enumerated.

3. If no enumerated power authorizes Congress to pass a certain law, that law may not be enacted, even if it would not violate any of the express prohibitions in the Bill of Rights or elsewhere in the Constitution. 

4. The Constitution authorizes Congress to "regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

5. We have recognized, for example, that "[t]he power of Congress over interstate commerce is not confined to the regulation of commerce among the states," but extends to activities that "have a substantial effect on interstate commerce." 

I'm baffled.

Of course these quotes come from what Justice Roberts has written over several pages.  Quotes 1-3 summarize the meaning of our Constitution of enumerated powers.  Quote 4 is the enumerated power in our Constitution which is known as the commerce clause.  Quote 5 is a good statement of what the Court has come, over the years, to actually think about the Constitution's commerce clause.

I don't understand how quotes 1-4 can fit with quote number 5.  The last quote says that Congress has been granted more power over commerce, specifically it has been granted power to regulate intrastate commerce, than the power we find granted to Congress when we read the words actually written in the Constitution.

I do like the Justice's choice of words "not confined."  I think this is telling.  I think it is inconsistent with quote 2 which says our Congress is a legislature of limited powers.  It seems to me reasonable to suggest that "not confined" is pretty much the opposite in meaning to "a limitation of powers."

It also seems to me reasonable to conclude that over the years the Court has come to change the meaning of the commerce clause.  But, in doing that, the Court has done more.  It seems the Court has turned a constitution for a government of limited powers into a constitution for a government that is "not confined" to expressly enumerated powers.

And, if so, it seems reasonable to conclude that the Court, over the years, has essentially amended the Constitution.  Of course, if you read the Constitution, you will not find that the Court has the constitutional power to amend the Constitution.

Perhaps it is time to put away the Court's commerce clause jurisprudence and end the contortions the Court must go through in presenting it's opinions to convince us that a written constitution for a limited government can also be a constitution for a government that is unconfined?

ACA, Court, & Constitution

I've hardly had time to read any of today's Court opinion, but my sister called earlier and asked if I was surprised.  Well, no surprise on my part.

One reason is that for quite a number of years now many justices seem to be operating on the premise that their job is to encourage every one to believe that it is constitutional for Congress to infringe upon economic liberty.  Of course, there are several ways in which the ACA infringes individual economic liberty.  Perhaps for many justices the details of the infringements don't much matter since the Court's jurisprudence over the past several decades has mostly rested upon the proposition that economic liberty is not one of the liberties protected by the Constitution.  In principle, then, today's opinion is no surprise.  Still, prior to the opinion I had hoped there would be enough justices on this Court who would be hard pressed to concoct a reason for why a constitutionally limited government could force people to participate in interstate commerce so that Congress could then regulate what it forced.  This take me to the second reason I was not surprised.

The second reason I was not surprised is that decades ago members of the Supreme Court came to the opinion that the fact that Congress had the power to tax meant Congress could use the power to tax to do what it otherwise could not constitutionally do.  I don't remember exactly, I think this was an opinion that said Congress could create Social Security even though there was no enumerated constitutional power to do so, but I'm not going to look this up right now.  In any case, without having read the opinion yet, this seems pretty much what this Court opined.  That is, the statute's mandated commerce is not constitutional, but since Congress has the power to tax, Congress can impose a tax on a person who does not purchase health insurance.  Therefore, Congress has the power to impose the mandate after all.  I know, I'm making the whole darn mess sound so circular.  But, that's what it sounds to me like what the Court has decided today.  Congress can do what it doesn't have the power to do.  I suppose this will surprise some, but at least one previous Court has reasoned in just this way.  So, no surprise on my part.

All of this reminds me of perhaps a third reason I should not be surprised, and this is because of one of my economist heroes is Friedrich A. Hayek.  Specifically, Hayek opened Rules and Order with:

When Montesquieu and the framers of the American Constitution articulated the conception of a limiting constitution that had grown up in England, they set a pattern which liberal constitutionalism has followed ever since.  Their chief aim was to provide institutional safeguards of individual freedom; and the device in which they placed their faith was the separation of powers.  In the form in which we know this division of power between legislature, the judiciary, and the administration, it has not achieved what it was meant to achieve.  Governments everywhere have obtained by constitutional means powers which those men had meant to deny them.  The first attempt to secure individual liberty by constitutions has evidently failed.

Constitutionalism means limited government.  But the interpretation given to the traditional formulae of constitutionalism has made it possible to reconcile these with a conception of democracy according to which this is a form of government where the will of the majority on any particular matter is unlimited. . . .

In other words, by 1973 when this was published Hayek was specifically pointing out that our constitutionalism had failed to limit government and protect individual liberty.  So, no surprise when, today, the Court again fails to see in our Constitution the protection of individual economic liberty.  Perhaps this failure of constitutionalism is because so many on the Court over the years have failed to carry out their part in the separation of powers?  That is, for decades now many on the Court seem to have seen their job as saying what Congress does is constitutional because Congress did it.

ACA Oral Argument

There were many interesting things said in oral argument before the Supreme Court yesterday with respect  to whether or not the Affordable Care Act (ACA), a.k.a. Obamacare, is constitutional.  At issue is whether the enumerated constitutional power of Congress to regulate interstate commerce includes the power to compel a person to purchase health insurance.

Very early on Justice Kennedy asked the Soliciter General, who was arguing in support of the constitutionality of the health insurance mandate, the following question: "Can you create commerce in order to regulate it?"  The answer was: "That's not what's going on here, Justice Kennedy, and we're not  seeking to defend the law on that basis."

I wish Justice Kennedy had asked his question in the following way: "Can Congress compel commerce in order to regulate it?"  I think this is a better, more precise, way to put the key constitutional question with respect to the health insurance mandate.  The action of Congress is actually not to "create," it is to compel many individuals to do something they would not choose to do on their own volition.  It seems to me that the constitutional power of Congress is the power to regulate voluntary exchanges between a buyer and a seller located in different states.  It seems obvious that the power to regulate exchanges (commerce) cannot include the power to compel exchanges.

Of course, Justice Kennedy's question seems very close to my question, but I think that there are many potentially different implications that follow from using "create" rather than "compel."  I suggest that using "create" makes the action of Congress seem much more benign than it truly is.  A definition of "create" at dictionay.com suggests the Justice was asking: "Can you cause commerce to come into being in order to regulate it?"  Certainly, put in this way, the action by Congress under Court review seems almost a good thing.  After all, "creation" is generally a good thing, and in the realm of economic affairs it seems to be generally accepted that more economic activity is better than less.

So, I fear, that asking the question in the way Justice Kennedy did, makes it conceptually pretty easy to decide the answer is yes.  After all, if the action of Congress is to create commerce that is "good for everyone" then it could seem to make sense for Congress to create commerce in order to regulate it.

However, we should conclude that Congress cannot create commerce.  Congress might participate in commerce, but it cannot create commerce.  Searching online dictionaries provide a couple of useful definitions of "commerce" in this regard:

an interchange of goods or commodities

the buying and selling of goods.

These definitions suggest that my definition of interstate commerce, i.e., a buyer and a seller located in different states, is on target.  It also suggests that we should not think that commerce is created.  Commerce emerges through the voluntary actions of different individuals. Commerce is not created by the actions of either a buyer or a seller alone.  Commerce emerges from the actions of a buyer and seller in an interaction between the voluntary actions of each.

Consider that Congress can engage in commerce by being either a buyer or a seller, but of course it cannot be both buyer and seller.  What would we say if Congress attempted to "create" commerce by either (a) telling a person she must buy something from the US Government, or (b) telling a person she must sell something to the US Government?  On the surface either (a) or (b) might appear to be commerce because we could observe a "buyer" and a "seller," but neither would be commerce.  Both (a) and (b) involve an action by Congress to compel either a buyer or a seller to act as the government commands.  Congress cannot "create" commerce, or create an exchange between a buyer and a seller without using force to compel one or the other individual, or perhaps even both, to act in a way that would not otherwise be chosen for themselves.

I suggest the appropriate question to evaluate the constitutionality of the health insurance mandate in the ACA is: Does Congress have the power to compel a person to purchase something she would not otherwise purchase?  The answer, of course, is NO.

Interstate Commerce & the Health Insurance Mandate

Today the Supreme Court begins three days of oral argument with respect to judging the constitutionality of the Affordable Care Act (ACA), which is often referred to as either "health care reform" or "Obamacare." The Constitution is conceptually constructed on the idea of "we the people" granting specific powers to Congress by writing a list of "enumerated powers" in Article 1, Section 8 of the Constitution. Congress is supposed to have only the powers that are specifically enumerated, and when Congress creates a statute that falls outside the enumerated powers such a statute is supposed to be declared to not be law.

Thus, a key issue before the Supreme Court is whether or not the Constitution includes an enumerated power by which members of Congress (along with the President who also swears an oath to protect and defend the Constitution) have the power to create various statutory provisions in the ACA. Specifically, the question is whether Congress has the enumerated power to require every person to purchase government defined "minimum" health insurance coverage.

It is clear that such a power is not directly enumerated in the Constitution. The Congress may still have the power to act as it has in the ACA if the power to require the purchase of insurance can be said to fall within one of the enumerated powers. Congress and the President have asserted that the power does in fact fall within the enumerated power to regulate interstate commerce. Here is the relevant constitutional text:

The Congress shall have Power . . . . To regulate Commerce . . . among the several States . . . .

Notice that the words in the Constitution do not say "Congress shall have the power to regulate interstate commerce." However, I do think "interstate commerce" is a good modern statement of the meaning of the words "among the several states."

Does this enumerated power mean that Congress has the power to compel a person to purchase health insurance with certain "minimum" coverage? Former Senator Tom Daschle says yes:

"From both a legal and practical perspective, the choice is clear. Congress was well within its authority in passing the individual mandate to regulate the interstate effects of an industry that is almost 20 percent of our nation’s economy— more than $2.5 trillion each year."

It seems to me Mr. Daschle must think the interstate commerce clause of the Constitution is: Congress shall have the power to regulate economic activity. In addition, Mr. Daschle must think that the word "regulate" includes the meaning of the word "mandate." Mr. Daschle is not alone in this view of the interstate commerce clause, and many decades of Supreme Court constitutional jurisprudence has, at times, come very close to explicitly writing just what Mr. Daschle writes in this quote. So, if your reading of the Constitutional text suggests to you that Congress does not have the power to compel a person to purchase anything, not even health insurance, don't be quick to assume that the Supreme Court will say the Congress does not have this power.

In my view, such conclusions about the meaning of the interstate commerce clause amount to the Court's constitutional jurisprudence having essentially amended the Constitution to say something like: Congress shall have the power regulate, compel and prohibit economic activity. Well, maybe the Court hasn't yet said that Congress has the power to compel economic activity, but if it decides that the health insurance mandate is constitutional, then I suggest the Court's own copy of the Constitution must read as I suggest.

What does the power to regulate interstate commerce mean? First, I suggest commerce means an exchange between two persons, one being the buyer and the other the seller. Commerce does not mean any and all economic activity. For example, commerce does not include production activities (and the Court said this was so for many, many years, but not often now). Second, interstate commerce would mean an exchange such that the buyer is in one state and the seller is in another state. It does not mean an exchange between a buyer and a seller in the same state (and the Court said this for many years, but not so much now). Third, regulate means to specify rules, not to compel or to prohibit. It doesn't make sense to specify rules for commerce, or for exchanges, when there are no exchanges, regardless of whether there are no exchanges because there are people who do not want to exchange or there are people who want to exchange that have been prohibited from doing so because of government's prohibition (and the Court has said this at times with respect to prohibition).

Therefore, it seems to me that Congress has the constitutional power to specify rules for the interactions between a buyer and a seller who are located in different states.

Contrary to Mr. Daschle's apparent view of the Constitution, Congress does not have the power to regulate or to compel any economic activity just because such activity, in aggregate, can be said to involve a big number for the money that changes hands in all exchanges combined. There can be only exchanges by persons in one state that when accounted for in aggregate involve a large dollar figure.

The Court should say the Congress has the power to specify rules by which a buyer in one state and a seller in another state will exchange money for a health insurance contract. The Court should also say that this is the extent of the constitutional power of Congress with respect to health insurance. Of course, many today will say this limits Congress far too much. Such an understanding of the Constitution does indeed imply a Congress, and a President, with little power to intervene in our economic affairs. But, this is what the words in the Constitution actually say, and it is a view of limited government that the constitutional framers put before "we the people" to be ratified. If many today think the words in the Constitution should be different, then these words should be made different by a proper amending of the Constitution. After all, regardless of Court opinions, unless the words are amended, the words in the Constitution are still "The Congress shall have Power to regulate commerce among the states."

Joke of the Day?

The DIAPER INVESTMENT AND AID TO PROMOTE ECONOMIC RECOVERY ACT must be a joke, right?

Oh wait, I forgot. Article 1 Section 8 of the Constitution says that "Congress shall have the power to give diapers to families."

Hayek on American Constitutionalism

Hayek:

When Montesquieu and the framers of the American Constitution articulated the conception of a limiting constitution that had grown up in England, they set a pattern which liberal constitutionalism has followed ever since. Their chief aim was to provide institutional safeguards of individual freedom; and the device in which they placed their faith was the separation of powers. In the form in which we know this division of power between the legislature, the judiciary, and the administration, it has not achieved what it was meant to achieve. Governments everywhere have obtained by constitutional means powers which those men had meant to deny them. The first attempt to secure individual liberty by constitutions has evidently failed. [Law, Legislation and Liberty, Volume 1: Rules and Order, p. 1]

Does this seem correct? If so, are there any means by which limited government might be achieved?

The Government Budget & Government Borrowing

Congressman Ryan unveiled his proposed U.S. budget yesterday, and of course there has been much recent talk in politics about taxing, spending, budgets, deficits, and debt.

There is even a lot of political theater these days over whether to continue to fund government in the current fiscal year since the last Congress failed to pass a budget. Well, I write "failed," but I suspect the people in charge of the last Congress, for whatever reasons, may simply have chosen not to pass a budget.

It seems Congressman Ryan is trying to lead Congressional budget choices in the direction of balancing the U.S. government budget some time in the future. I suppose that may seem a worthy goal for the government's future, but I'm wondering what sense it makes for government to routinely run a deficit?

When the President and members of Congress choose to run a government deficit it means that the President and members of Congress are choosing to spend more in any year than the government takes in through taxation in that year. This means the President and members of Congress are choosing to borrow at least some of the money they spend "on our behalf."

Well, how often have the President and members of Congress chosen to borrow money? When the President and members of Congress choose to borrow money, how much do they borrow?

To answer these questions I went to the web page for the President's annual budget, and I downloaded the historical tables in spreadsheet form. It turns out that in only 6 years in the last 50 years have the President and members of Congress chosen not to borrow money to spend on government projects and activities. It seems rather routine for the President and members of Congress to borrow money for the things they do "on our behalf."

To get a sense of how much the President and members of Congress choose to borrow when they borrow I used the spreadsheets to calculate how many cents of every dollar spent by the President and members of Congress in any year come from borrowed money. In 1980 for example the President and members of Congress borrowed 20 cents of every dollar they spent, and back in 1970 they borrowed only 1 cent of every dollar they spent.

The two largest years for borrowing by the President and members of Congress over all of the last half century have come in the 2009 and 2010 budget years. In 2009 the President and members of Congress borrowed 40 cents for every dollar they spent that year, and in 2010 they borrowed 42 cents on every dollar they spent. The next largest amount borrowed was in 1983 when the President and members of Congress borrowed 26 cents on every dollar they spent.

In the current budget year the President offered to Congress a budget proposal that apparently proposed borrowing 33 cents for every dollar they would spend in the 2011 budget year. I see from today's editorial in Investor's Business Daily that the President and members of Congress are finding it difficult to agree to cutting $33 billion from the 2011 budget. In other words, the President and members of Congress are arguing over whether they should borrow 33 cents or only 32 cents on every dollar they spend during the 2011 budget year. No, I'm not kidding.

Once again I wonder why the President and members of Congress want to borrow money at all, much less 40 cents or even 30 cents for every dollar they spend on our behalf. I understand Congressman Ryan, as well as many other republican members of the House, are proposing that the U.S. budget return to 2008 spending levels, and this is like proposing to return to a year in which the President and members of Congress chose to only borrow 15 cents on every dollar they spent that year. Why not propose a return to 1970 when the President and members of Congress chose to only borrow one penny for every dollar they spent?

I don't think it is easy to pick out the specific things the President and members of Congress borrow money for. So, I think it is acceptable to conceptually frame their choices as borrowing money for every government policy, action, and activity. Recently Senate Majority Leader Reid appeared on YouTube lamenting the idea that some members of Congress had proposed no longer funding a government program that subsidized the annual Cowboy Poetry Festival in Elko Nevada.

No, I'm not kidding. The President and members of Congress borrowed about 40 cents in 2009 and 2010 for every dollar they spent on this Cowboy Poetry Festival. Imagine that. I recently borrowed money to purchase a home, and the President and members of Congress are borrowing 40% of the money they spend to fund this Cowboy Poetry Festival.

Honestly, I can't imagine how anyone could justify using Congress's constitutional power to tax to gain the money to fund a Cowboy poetry festival, much less borrow 40% of the money from our future incomes and from the future incomes of our kids to fund such an activity. Of course, I even suspect that such programs as these should be declared unconstitutional because I simply can't find "Congress shall have the power to subsidize Cowboy Poetry Festivals" in the list of enumerated powers in Article 1, Section 8 of our Constitution.

But, then again, I might change my tune if I thought, as Senator Reid seems to think, that ending the government program in question would mean that the tens of thousands of people who attend the Cowboy Poetry Festival each year "would not exist." Maybe the President and members of Congress should borrow money so that these people can continue to live, eh?

Congress and the Constitution

The Senate has an "omnibus" spending bill and Senator Coburn's webpage has a spreadsheet the summarizes all the "earmarks" in the bill. The Senator's spreadsheet is worth a look. Here are a few of the things Congress is considering spending money on. Keep in mind that since the government is running a deficit, we might as well say these are some of the things Congress is borrowing money for:

• $1 million - City of Rockville sanitary sewer rehabilitation project
• $2.5 million - Long Creek Watershed Management District for a stormwater and water quality project
• $1 million - City of Hamtramck for water and sewer line rehabilitation
• $1 million - County of Riverside, Moreno Valley, CA, for facilities and equipment related to trauma care
• $16.1 million - John F Kennedy Center for the Performing Arts and its affiliate, as authorized by the Elementary and Secondary Education Act
• $10.5 million - National Board for Professional Teaching Standards. . . .
• $25.6 million - National Writing Project . . . .
• $1 million - Planning, Design, Renovation and Revitalization of Historic Building
• $1 million - For event and meeting space infrastructure at the Bangor Regional Arena and Meeting Complex
• $0.5 million - To acquire blighted property and renovate facilities to create an industrial park
• $1 million - For the acquisition of facilities in Covington, LA to be used for community services and economic development
• $1 million - (City) Demolition of Blighted Buildings
• $1.25 million - For construction of a senior center
• $1.55 million - For improvements to the Pigeon Harbor Industrial Park
• $1 million - For construction of facility that will accommodate an education and interactive learning center
• $1 million - To renovate the facility for the Jewish Vocational Service and to provide equipment and furnishings
• $2.5 million - Legal Advocacy for Crime Victims (Nationwide)
• $1 million - Bronx River and South Bronx Waterfront
• $1 million - Washington State Methamphetamine Initiative
• $4 million - Marine Aquaculture Lab Operations
• $4.5 million - Center for Water Technology and Policy
• $2 million - Sensors for Monitoring Chesapeake Bay Watershed Health
• $2 million - Center of Teacher Excellence
• $4 million - Life Sciences Commercialization Laboratory
• $5 million - Phase II construction, National Center for Natural Products Research, Oxford, MS
• $2 million - Market Development, WI
• $2.6 million - Agricultural Pest Facility, HI
• $3.49 million - Formosan Subterranean Termites Research, New Orleans, LA
• $1.65 million - Human Nutrition Research, Boston, MA; Houston, TX; Kannapolis, NC
• $1.45 million - Mosquito Trapping Research/West Nile Virus, Gainesville, FL
• $1.25 million - University of Alabama, Rural Health Entrepreneurial Development Project, Tuscaloosa, AL
• $2.4 million - Bank On USA demonstration projects, HI

This is just a really, really small part of the entire list.

Why is Congress spending money on these things, much less borrowing money for them? I suppose the answer to this question is simple, i.e., this is the way our rent seeking system of politics works these days.

I think the more important question is: Why do members of Congress think they have been granted the power to spend money on such things? Our Constitution defines our government, presumably, to be a limited government with specifically enumerated powers. You've read the Constitution. It goes something like this:

The Congress shall have Power . . . . To borrow money on the credit of the United States; To regulate Commerce with foreign Nations, and among the several States . . . . To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; . . . . To establish Post Offices and Post Roads; To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; . . . . To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; To provide and maintain a Navy. . . .

I just can't find in my copy of the Constitution that Congress has the power to create a center for teacher excellence, or the power to renovate buildings for religious vocational services, or the power to create industrial parks, or the power to be an advocate for crime victims, or the power to demolish blighted buildings for city governments, or the power to provide facilities for trauma care. I suspect that if I had time to read through Senator Coburn's entire spreadsheet I would find no more than one or two percent of the spending items were associated with the actual enumerated constitutional powers of Congress.

Does it make sense to ask if the United States Government is now, properly speaking, a constitutional form of government?

Constitution & Health Care

I've been reading Judge Hudson's opinion concerning the recently passed "health care reform" statute. I'm not sure I can continue to endure the pain. I am suspicious of the logical gyrations that seem to be integral, these days, to constitutional jurisprudence. I think we should weep for our lost Constitution. But, perhaps, when the smoke clears on all the court challenges a bit of our Constitution will have been returned. After all, it seems to me that the gyrations of constitutional analysis are probably most needed when it should be easy for us to see that an act of Congress, and/or the President, is unconstitutional.

Let's consider a bit of the analysis in support of the constitutionality of the statute as summarized by Judge Hudson:

"Critical to the Secretary's argument is the notion that an individual's decision not to purchase health insurance is in effect 'economic activity.' The Secretary rejects the Commonwealth's implied premise that a person can simply elect to avoid participation in the health care market. It is inevitable, in her view, that every individual--today or in the future--healthy or otherwise--will require medical care. . . .The Secretary maintains that the irrefutable facts demonstrate that '[t]he conduct of the uninsured--their economic decision as to how to finance their health care needs, their actual use of the health care system, their migration in and out of coverage, and their shifting of costs on to the rest of the system when they cannot pay--plainly is economic activity.'" (p 11-12).

This analysis by the Secretary seems pure nonsense to me. The analysis seems to conclude that the actions of the uninsured, whatever the actions are or aren't, are plain old "economic activity." Well, I have been known to suggest to the students in my economics classes that "everything is economic." So, I'm with the Secretary in concluding we have lots of "economic activity" involved in choosing or not choosing "health care." But the nonsense in all of this is that we really should be asking what that "economic activity" has to do with the constitutional powers granted to Congress. Does Congress have the power to regulate any (and all) "economic activity?"

I think the short answer to this question is simple. NO.

Article 1 Section 8 specifically grants the power to Congress to regulate interstate commerce. It is not the case that economic activity is equal to interstate commerce. Commerce means someone buys a good or service from someone else. Interstate commerce means the buyer involved in the act of commerce is in one state and the seller involved in the same act of commerce is in a different state. If the buyer and seller engaging in the act of commerce between consenting adults are in the same place, such as when I buy a big mac at McDonalds for lunch, then it is an act of intrastate commerce. Congress has the power to regulate the buying and selling between people in different states, it does not have the constitutional power to regulate the buying between people in the same place or in the same state.

The Secretary's analysis is fun, but it seems a waste of time, resources, and taxpayer dollars because Congress is not supposed to have the constitutional power to regulate any/all economic activity, only the specific form of economic activity that involves exchange between a buyer in one state and a seller in another state.

Of course, the constitutional issue in this case involves whether Congress has the power to mandate that people purchase health insurance coverage. I certainly think that a person who chooses not to purchase health insurance has made an economic choice, but an economic choice is not economic activity, nor is an economic choice always an act of commerce. Apparently Judge Hudson concluded that the constitutional power to regulate interstate commerce was not the power to compel an act of commerce, whether of the interstate or intrastate variety. That certainly seems the sensible and correct conclusion to me. If I choose not to purchase insurance, or any other good, I have chosen not to engage in an act of commerce. It is even sensible to point out that I might sometimes not choose to engage in an act of commerce because I think the tax Congress has imposed on the commerce results in a price that is too high for what I get in return from my purchase. I hope that Congress does not have the power to both tax an act of commerce and then compel me to engage in that act of commerce as well.

I think the constitutionality, or unconstitutionality, of this statute should be quite straightforward. Congress has the power to regulate an act of commerce between a buyer in one state and a seller in another. Pretty much all of my actions to purchase health care services involve intrastate commerce. Why? Because I go to see my doctor in his office, and even if my doctor's office is in another state, the act of commerce between me and my doctor always takes place at one location. And, while the prescription drugs I purchase may come from a factory outside of Colorado, I always buy my prescription drugs from the Walgreens around the corner, which once again is a act of commerce at one location. The straightforward analysis of Congress's constitutional power is that Congress does not have the power to regulate, prohibit, or compel any of these sorts of acts of commerce I engage in frequently.

I can think of one sort of act of commerce in all of this that might involve me in an act of interstate commerce. I might purchase health insurance from a business which has its offices in a state other than Colorado. If I did, then Congress would have the constitutional power to regulate this act of purchasing/selling insurance. But, the power to regulate this commerce is not the same thing as the power to compel the act of commerce (which would then not be an act between consenting adults). In this area of constitutional power, I suspect that Congress has actually been neglecting it's constitutional duties. I think many states regulate health insurance providers in a way that amounts to erecting a barrier to interstate commerce. State law in many cases does not allow an individual to purchase health care insurance coverage from an insurance business which is located in a different state. If Congress would use it's interstate commerce power to prohibit such state regulations, then the cost of health care insurance would be less than it is these days. But, noooo, Congress acts instead to use power in unconstitutional ways.

It is unfortunate, perhaps even characteristic of an unjust government, that the Supreme Court, over time, has come to understand the Constitution in ways that encourage all the conceptual gyrations of lawyers and professors because, I think, the gyrations are efforts to encourage us to conclude the Constitution means something other than what the words in the Constitution actually mean. The words written into the Constitution seem to me to describe a government significantly limited in scope, and not a government that is supposed to have the power to regulate any "economic activity." The words written into the Constitution were chosen from the conceptual perspective of individual liberty and it seems to me the constitutional power of the Court was meant to be exercised in defense of individual liberty. Conceptual gyrations and gymnastics seem to me to serve the purpose of removing limits from Congressional power and thus infringing on individual liberty.

A Repeal Amendment

RANDY BARNETT & WILLIAM HOWELL:

Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed.

Why amend the Constitution in this way?

The Repeal Amendment would help restore the ability of states to protect the powers "reserved to the states" noted in the 10th Amendment. And it would provide citizens another political avenue to protect the "rights . . . retained by the people" to which the Ninth Amendment refers. In short, the amendment provides a new political check on the threat to American liberties posed by a runaway federal government. And checking abuses of power is what the written Constitution is all about.

I think this is probably a good idea. However, I'm not sure 2/3 of the state legislatures would ever act to repeal a federal law or regulation. Still, I think it would probably be good if a number of state legislatures made efforts today to push this amendment. It would probably be a good thing is there were more people who looked at the Constitution and compared and contrasted the government implied by the Constitution to the governments we have today.

Congress Created Them All

DON BOUDREAUX in a letter to the Washington Post:

You’re right to worry that Uncle Sam responded to the public’s anxiety about terrorism by creating an overgrown intelligence bureaucracy with bloated budgets that strain our wallets and arbitrary powers that mock the Constitution as they threaten our freedoms . . . Will bureaucrats in, say, the new Bureau of Consumer Financial Protection spend taxpayer funds more wisely than do bureaucrats in the NSA? Is the power to command people to purchase health insurance, or the power to prohibit consenting adults from buying and selling certain kinds of financial instruments, really so mild and beneficial that we should calmly welcome the exercise of these powers while we simultaneously quake with fear at the exercise of “intelligence” powers?