Monday, March 31, 2014

MSNBC and My HuffPo Debut: A Principle of Ugliness No More

By Michael Dorf

[N.B. 1: In advance of the oral argument in Hobby Lobby last week, I was on MSNBC. Video available here.  Note that at the very end of the segment I appear distracted. That's because the MSNBC engineer cut my audio while the host was still speaking, so I thought the line had gone dead.  The hazards of live tv!

NB 2: In addition to my twice-to-thrice weekly posts here on DoL and my bi-weekly columns on Verdict, I now have authoring privileges on the Huffington Post, where I shall, from time to time, write short essays for a somewhat more general audience than my general readership.  My first such essay is now available there.  I am also reproducing it below:]
More than half a century ago, a young Yale law professor named Robert Bork wrote in The New Republic that requiring private business owners to open their doors to all members of the public regardless of race or sex would enact into law a "principle of unsurpassed ugliness." Congress disagreed and passed the landmark 1964 Civil Rights Act.
Bork went on to have a distinguished, but controversial, career. His academic work provided the theory for curtailing antitrust enforcement. As President Nixon's Solicitor General, Bork executed the Saturday Night Massacre. He wrote many important decisions as a judge on the U.S. Court of Appeals for the D.C. Circuit. And, most famously, President Reagan's 1987 nomination of Bork to the Supreme Court yielded a national conversation about how to construe the Constitution and federal laws.
Bork was neither a racist nor a sexist, even in 1963. As he explained during his confirmation hearing, his original opposition to public accommodations laws was based on free-market libertarianism. He said that he came to regard even that earlier view as mistaken for failing to acknowledge that the good done by civil rights laws far outweighs the infringement on economic liberty.
Bork died in late 2012, but he remains a hero on the right. Unfortunately, however, many of his fellow conservatives do not appear to have followed Bork's lead when it comes to valuing social goods other than individual liberty.
Increasingly, contemporary conservatives elevate even far-fetched claims of liberty over the greater good. For example, in cases currently before the U.S. Supreme Court, corporate plaintiffs claim a religious right to deny contraception coverage to employees. In a case from New Mexico, a for-profit wedding photographer claims a free speech right to refuse her company's services to a same-sex couple. And last month Arizona made headlines when it nearly enacted a law that would have expanded the rights of business owners to religious exceptions from public accommodations laws.
To be sure, the context has shifted. In the foregoing examples, the claimants seek exceptions based on speech and religion, rather than general libertarian grounds. But that shift appears opportunistic rather than fundamental. After all, the right continues to attack the Affordable Care Act's obligation to purchase health insurance on full-throated libertarian grounds having nothing to do with speech or religion.
In explaining his change of heart on public accommodations, Judge Bork portrayed his earlier libertarianism as a product of a view of the free market in which systematic discrimination could not occur because it would be unprofitable. As he gained more experience with the real world, Bork said, he came to understand that social interactions are more complicated.
Put differently, Bork grew up. He recognized that as important as individual liberty is, it must sometimes yield to the greater good. Thus, while the government cannot punish anyone for expressing racist, sexist or homophobic views, it can condition participation in the market on opening the doors of a business to all people, regardless of race, sex or sexual orientation.
That is a hardly a principle of unsurpassed ugliness. On the contrary, seen from the vantage point of a half century of civil rights law, it looks quite beautiful.

Friday, March 28, 2014

Optimism and Pessimism (Mostly Optimism) About the Unionization of College Football Players

-- Posted by Neil H. Buchanan

Earlier this week, a regional director of the National Labor Relations Board (NLRB) issued a decision that could be the turning point in the relationship between universities and the athletes who represent them on football fields.  The director concluded that football players at Northwestern University (one of fourteen current members of the Big 10 conference) are employees of the university, and thus are eligible to hold a vote to form a union.  Although there are many miles to go in this legal marathon, this decision could end up changing everything in college sports.

There are, of course, a daunting array of legal questions that follow from this decision.  Some have straightforward answers, such as whether this decision (if ultimately upheld) would apply to athletes at state universities.  (No.)  Others are generating excited discussion among various groups of legal analysts.  My colleagues in tax law, for example, are already having a field day (no pun intended) discussing the many questions raised by the potential taxation of employee-athletes.

I might end up weighing in on a number of those legal issues in future posts.  For now, however, I want to think aloud about some of the implications, both positive and negative, of allowing college athletes to unionize.

Regular readers of Dorf on Law might recall that I have at various times expressed great skepticism about calls to pay cash compensation to college athletes.  Most recently, I wrote last December about the disturbing tendency among most observers to treat full-ride scholarships, including free room and board at top universities, as somehow worthless.  (Links to all of my earlier posts and columns about college sports can be found at the beginning of that December 5 Dorf on Law post.)

I also have criticized the overwrought claims about a "plantation mentality," and other inapt imagery, that others have used to attack the National Collegiate Athletic Association (NCAA) and its current policies regarding student-athletes.  That is not to say that I am in any way a fan of the NCAA.  Its procedures are often arbitrary and capricious, and it has if anything allowed far too much cheating to go unpunished in the interest of maximizing revenues.  (Star athletes get special treatment from the NCAA, when TV ratings are threatened.)

I am, in fact, overall rather optimistic about the possible effects of unionizing college football players and allowing them to bargain collectively with their universities.  A union could, and should, focus less on immediate big-money payoffs and more on matters that could actually improve the lives of all college athletes, especially later in their lives.  The Northwestern players' two main concerns "were better health care and limited practice hours."  If players were allowed to unionize, and if those two issues are what the new union puts front and center, that could be great news.  Despite my skepticism about other issues, I have always agreed that the players deserve to be provided with better health care and (especially) disability insurance, and that they should not lose their scholarships if they become injured (or leave the team for other legitimate reasons).

More importantly, the essence of my objections to pay-for-play have been predicated on the idea that athletes should actually be allowed to be students, rather than being encouraged to go for short-term cash.  Even though the evidence shows pretty convincingly that college is still a very good deal for scholarship athletes (with Northwestern itself leading the way with a 97% graduation rate), there is no doubt that too many college athletes -- almost certainly a small minority, but not a trivial one -- are not benefiting from the educations that they are supposedly receiving.

Of course, there is a possible paradox.  If a union succeeds in forcing universities to allow their athletes to become real students, then they might no longer be eligible to be unionized.  The director's ruling, notably, is based on the conclusion that the players are not "primarily students."  If they become students again, they would presumably be subject to earlier NLRB rulings that have prevented students from unionizing.

But we can put that aside for now.  A more pertinent question is whether a union would actually follow through on an agenda to reduce practice time and improve health care.  It sounds good now, but would a union really leave all of that money on the table, when the highest-profile athletes would be clamoring for million-dollar paydays while still in college?  Actually, I think that they might.

The best place comparison, of course, is the union that represents players in professional football, the National Football League Players' Association (NFLPA).  Although the NFLPA is much smaller (representing only 50-60 players on each of 32 teams, as opposed to the 90 or more college players on each of hundreds of teams), and its players are professional, there are plenty of similarities.  For one thing, the average professional career lasts only three seasons, meaning that the NFL (which some players say is an acronym for "Not For Long") employs its typical employees for shorter terms than do colleges.  Colleges do not have 14-year veterans, of course, but those guys are true outliers in the NFL, too.

And the good news is that the NFLPA, despite its many disadvantages vis-a-vis a league that holds an antitrust exemption, is fighting the good fight.  Most importantly, perhaps, the NFLPA is the reason that the league still has a 16-game season.  The owners have been trying for years to move to an 18-game schedule, but the players' union has resolutely refused.  Given that the NCAA has allowed colleges to go from 11- to 12-game seasons, and to add conference championship games, and now is adding a layer of playoffs (along with oddities like allowing teams that schedule games at the University of Hawai'i to schedule a 13th regular-season game), it is important to have a counterbalance against the economic pressure to physically exploit the players even more than they are already being exploited.

Moreover, the NFLPA has been the driving force in trying to get the league to deal with head injuries, fighting the causes and consequences of concussions and the dementia that has become epidemic recently among retired players of the 1970's and 1980's era.  Early indications from medical studies suggest that the head injury problem starts at the college level (and even before), and there is plenty of evidence that NCAA schools are not taking this seriously enough.  If the players' union pushes hard on that issue, it would have earned everyone's respect.

Note also that having an outside entity (in this case, the players' union) forcing all teams to adjust their practice times downward (and to protect players better than they do now) would have the effect of benefiting players without compromising competition.  That is, every individual team currently has an incentive to push its players harder, to try to gain a competitive advantage.  This inevitably pushes up the demands on the young athletes.  The union would solve that group action problem, allowing everyone to dial it back without fear of losing an edge.  (There are always temptations to cheat, of course, but the new norm would surely center around less practice time.)

So, there are some reasons to think that unionizing college football players could have some very good consequences, significantly improving the lives of the players, and potentially forcing universities to act more like universities than Fortune 500 corporations.  I have already noted one reason for pessimism, which is that the union could instead try to simply turn college football into a pay-for-play semi-pro league, with health concerns and education left behind.

Even if that were not to happen, however, there are other reasons for concern.  Although the reduction in practice times, and the increased attention to head injuries and other health issues, would be a plus for players without being costly to the universities, other goals of a players' union could end up inadvertently harming players, because of their inherent costs.  My preference, for example, would be that a football scholarship be irrevocable (other than for obvious reasons like flunking out) for four years, and that the players whose playing careers forced them to reduce their class schedules would have their scholarships extended for one or two years to allow them to graduate.

That requirement, along with other player-friendly initiatives (especially university-paid disability insurance) would increase the per-player cost of running a football program.  This could have the unfortunate effect of contracting the size of football squads, which could then have the effect of causing fewer players to play more minutes (and to be forced to play even when badly injured).  The high-profile playing positions have recently become even more injury-laden, of course, with situations like the University of Florida Gators having to play their 4th-string quarterback last season, when the three young men ahead of him suffered season-ending (and potentially career-ending) injuries.

Some of the most brutal play, however, is seen on special teams, especially kickoffs, where little-used players try to prove their mettle by taking insane risks that end up injuring themselves and their opponents (and sometimes even their teammates).  The injury potential is so extreme that the NFL has even considered eliminating kickoffs entirely.  It is at least possible that, as a result of the reforms that I support, college teams could reduce their rosters to the point where the special teams players suffer more debilitating injuries, because there are fewer bodies available to share the punishment of the games' worst plays.

I do not view this concern as a reason to abandon the non-salary goals of the college players' union.  I offer this example as merely one possible side-effect of changing the economics of the game, of which there are surely others.  Although I have been skeptical of the idea that players should be paid in cash, rather than scholarships, it is abundantly clear that the players deserve to have the rules changed in ways that would redirect economic resources away from athletic departments and toward the athletes.  The side-effects need to be managed, of course, but they are not a reason to abandon reform.

Thursday, March 27, 2014

The Aw-Shucks Version of Conservative Economists' Dishonesty

-- Posted by Neil H. Buchanan

Did you know that economic scientists occasionally must force themselves to be more than just scientists, and instead to base their arguments on political philosophy?  Gasp!  That is the "dirty little secret" that conservative economist Greg Mankiw revealed in his column in last Sunday's New York Times Business Section.  Of course, framing the non-revelation in that way was very much designed to reassure people that economists are scientists in the first place, patiently offering "our understanding of how the world works", but who face the "necessity" of stepping outside of their scientific comfort zone -- because, you know, economic policies might actually harm some people.

Mankiw's writing is often difficult to take seriously, and this column appeared to be yet another example of why orthodox economists should not reveal in public how truly narrow they are.  He has, after all, spent the last year or so explicitly "defending the one percent," using a version of "just deserts" philosophy that simply assumes that rich people are rich because they are more productive than the rest of us.  (Why assume such a thing?  Why not?  Orthodox economic models are based on that assumption, too.  No need to question the orthodoxy, after all.)  As prominent as he is, his arguments are usually so flimsy that they do not merit even a moment's attention.

The column this past Sunday was different for three reasons.  First, as I noted at the top of this post, it was such a good example of orthodox economists' self-important pose as Scientists.  Economists like to pat themselves on the back for their "rigor" and "seriousness," to separate themselves from mere sociologists, political scientists, and so on.  The intensity of their commitment to proclaiming economics a science is matched only by the weakness of their claim to being actual scientists, as the balance of Mankiw's column so amply demonstrates.

Second, I could not help but laugh at the thinly veiled swipe at Paul Krugman that Mankiw delivers in the middle of the column.  Having admitted that "economic science is still a primitive body of knowledge," where "unintended consequences are the norm," he argues that economists should take a "big dose of humility."  And "if an economist is always confident in his judgments, or if he demonizes those who reach opposite conclusions, you know that he is not to be trusted."

Reportedly, the Times has a policy forbidding columnists from calling each other out by name.  (Probably a good policy, overall.)  Here, therefore, Mankiw is simply blowing a dog whistle for his conservative readers, all of whom have decided that Krugman is just a big meanie.  Supposedly, Krugman "demonizes" people with whom he disagrees, by pointing out that their policy prescriptions have been spectacularly wrong for years, while Krugman's have been notably and repeatedly proved right.  But that is just so rude for Krugman to say that people are being harmed by policies that are demonstrably wrong.  And, ya know, Krugman has been wrong, too!  (OK, not on any of the big issues since at least 2007, but you can bet he's been wrong.)  Of course, Krugman has readily admitted error, and refused to admit error where there was none.  But, per Mankiw, we should not trust someone who says things that turn out to be correct, and who points out when others have said things that were incorrect.

Krugman can defend himself just fine, but I found it amusing that Mankiw would feel the need to feed his base by saying oh-so-subtly that people like Krugman should be ignored because they are not humble enough.

I would not have devoted today's post to this topic, however, were it not for the third problem with Mankiw's column.  That is, he provides a wonderful case study in how conservative economists manipulate "the baseline problem" in making their policy arguments.  Conservative economists (and, to be clear, many liberal economists who buy into the basic framework of modern economics) take for granted the body of laws that allow a modern economy to function.  When criticizing a policy as "inefficient," the unstated assumption is that the other laws and policies are the baseline from which we can measure deviations from efficiency.

A stunningly clear example of this style of bad reasoning came up a few weeks ago, when a government report predicted that the Affordable Care Act would reduce labor supply in the future.  As I discussed in one of several posts on that subject, a prominent conservative economist became quite angry when people argued that reduced labor supply might be a good thing.  He had spent all that time trying to show that the ACA was inefficient, and people were not standing up to salute.

This was not, moreover, an example of the classic "efficiency versus equity debate," where soft-hearted people supposedly decide to allow the economy to operate below efficient levels, in the name of being "fair."  My point was that there is nothing about the pre-ACA labor supply that should be privileged in policy debate, such that deviations from it should be used to label the ACA an inefficient policy.  The laws of contract, collective bargaining, employment discrimination, antitrust, corporate governance, and so on all contribute to people's labor supply decisions.  Why should we assume that those laws, as currently constituted, should be the basis on which to determine whether the current economy is more efficient than an economy that would exist under some other combination of those and other laws?

Mankiw's column highlights this point by claiming that the "humility" that economists should adopt before offering policy advice requires them to respect the possibility that they can be wrong, so that they should strongly presume that "when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected."  See?  The point is that we should not disturb the "free" choices that people have made in private contracts, because anything that we might do as a matter of policy could be wrong.

Those choices, however, are inextricably based on the existing web of laws and policies.  Therefore, it is meaningless to say that we should modestly step back, hoping at least to "do no harm" by not injecting the government into private decisions best left to the preferences of free men.  The government -- even a stripped-down "night watchman" state -- has made countless policy choices that restrict and define the choices that people make.  It cannot be otherwise.

Mankiw's two examples are especially (if inadvertently) helpful.  He counsels against increasing the minimum wage, because doing so "would disrupt some deals that workers and employers have made voluntarily."  Not being able to miss out on the chance to join his conservative brethren in attacking the ACA, he then says that "[t]he Affordable Care Act has disrupted many insurance arrangements that were acceptable to both the insurance company and the insured; these policies were canceled because they deviated from lawmakers’ notion of the ideal."

On both of these subjects, the very idea that there is a "no government" -- or even a "less government" -- baseline is simply absurd.  Even if we leave aside the rather notable omission of the effects that the policy choices might have on people who are not parties to the private deals that have been made (for example, children who live in poverty, because their parents are not offered jobs in private deals that pay a living wage), it is simply not logical to conclude that we must leave the current labor market or the current health insurance market alone.

The point is not that I have a better baseline, or that anyone does.  The unstated claim underlying Mankiw's supposed modesty is about as immodest as one can imagine: "We should assume that the laws governing economic activity in the absence of this policy were going to result in economic activity that can meaningfully be called efficient."

If anything, the labor market and health care markets happen to be among the best examples to explicate the idea that the underlying laws are entirely contingent.  Do we have "at will" employment, or not?  Do we say that unpaid overtime was merely a "voluntary" renegotiation of terms, or was it a violation of the original contract (or maybe outright theft)?  Should health insurance be subsidized?  Should it even be something that is negotiated by employers, rather than by individuals?

None of these questions can be answered as a matter of "doing no harm."  They are entirely contingent on what one counts as harm in the first place.  If we saw two people making a transaction, knowing that one of them was going to pay for the transaction with stolen money, there would be no reason to respect that private transaction.  Different sets of laws, however, will lead to different conclusions about what even constitutes stolen money.

Respecting a transaction, because it is the transaction that people would make under the current set of laws, is not modest.  It simply assumes away the problem, and removes the possibility of questioning laws that undergird the privileges of the people whom conservative economists defend.

Wednesday, March 26, 2014

RFRA/ACA Oral Argument and the Targeting/Standing Question

By Mike Dorf

My latest Verdict column asks why the argument for religious exceptions was mostly advanced by liberals in 1990 in Employment Division v. Smith but is mostly advanced by conservatives in the Hobby Lobby/Conestoga Wood case. I offer five factors that bear on the question. Here I want to add one brief thought on an issue that arose during the oral argument.

Consider an exchange between Justice Alito and SG Verrilli. Justice Alito posed a hypothetical question in which Congress bans kosher and halal slaughter on grounds that it is cruel. Would kosher and halal butchers that were organized as corporations be able to complain about such a law? SG Verrilli said that they might be able to, because such a law would single out religion, and thus fall outside of the "neutral" category of Smith and RFRA, triggering heightened scrutiny under the Free Exercise Clause. That in turn led Justice Alito to change the hypo to a law that requires that animals be stunned before slaughtering, a practice that would not target religion at all, but that (under standard interpretations of kashrut and halal) would forbid kosher and halal slaughter.

Putting aside my objection to all slaughter, and also putting aside SG Verrilli's answer to the revised hypothetical, I want to note here the seeming oddity of Verrilli's initial reply: His theory of the case appears to be that a business corporation does not have a religion for RFRA purposes when confronted with a law of general applicability, but that it does have a religion for Free Exercise purposes when confronted with a law that targets religion. But if a corporation can't have a religion, then why does it matter that the government is targeting the religion the corporation lacks, rather than incidentally burdening that non-existent religion?

One possibility might be that SG Verrilli thinks that the religious rights of corporations are broader than statutory rights under RFRA. After all, the targeting example arises under the Free Exercise Clause, not (just) RFRA. But that seems backwards. RFRA uses the word "person", which, as the plaintiffs' lawyer Paul Clement argues, at least presumptively covers corporations, pursuant to the Dictionary Act. The constitutional language does not more clearly point to religious rights for (business) corporations.

Maybe the better answer would be that laws that target religion for special burdens violate the Establishment Clause, which is a structural principle. In this view, a corporation that suffers a business detriment incurs an Article III injury, and then it can sue because anybody injured by a law that violates the Establishment Clause has standing to vindicate its structural principle.

I actually like that answer quite a lot because I share the SG's intuition that the corporate kosher or halal butcher should be able to object to the targeted law, even if, per RFRA, a corporate kosher or halal butcher has a weaker basis for objecting to the incidental effect of the mandatory stunning law. But adopting this position does lead to the anomaly that it essentially reads the Free Exercise Clause out of the Constitution.  Per Smith, non-targeted burdens do not implicate the Free Exercise Clause, while per my reconstructed reading of SG Verrilli's argument, targeted burdens violate the Establishment Clause, so any violation of the Free Exercise Clause is redundant. So we're left with a puzzle.

Tuesday, March 25, 2014

Elane Photography Discussion Post-Mortem: The Distributive Aspect of Speech and Religion Exceptions from Public Accommodations Laws

by Mike Dorf

As I noted in my Verdict column on First Amendment exceptions two weeks ago, claims for such exceptions have been much in the news lately--prompting a veritable mountain of commentary, including a fair bit from yours truly. Here I want to add a few more shovels of dirt to that mountain, but first, a couple of pieces of shameless self-promotion.

First, during the 10-11 am hour today, I'll be on MSNBC, talking about the Hobby Lobby cases, while the oral argument is going on in the courtroom. You know, in case you don't have anything better to do.

Second, pretty much as I anticipated in yesterday's post, during our discussion of Elane Photography, Professor Epstein mostly criticized public accommodations laws as such, largely agreeing with me that it's difficult to find free speech exceptions to such laws without undermining the laws themselves. Here I want to follow up that discussion with a point I might have made had the discussion taken a different turn.

I have in mind a distributive feature of exceptions for commercial actors from general laws. I think that for me, and perhaps for other liberals, part of the resistance to free speech and free exercise exceptions for commercial actors is that recognizing such exceptions would benefit business owners but not people who work for others for a living. I'll focus on speech but some of what I have to say will be relevant to religion as well, and thus a propos of Hobby Lobby.

Suppose two Albuquerque bakers: Elane and Jane. Elane owns her own bakery, whereas Jane works for the ABC Cake Shop (so-named, apparently so that it appears first in the Yellow Pages!). Elane and Jane are both opposed to same-sex marriage. Bill and Ted go to Elane Bakery and ask if Elane will bake them a wedding cake with the words "Blessed Marital Bliss for Bill and Ted". Elane says that, notwithstanding New Mexico's public accommodations law, she won't, because to do so would express a view--that same-sex marriages are "blessed"--with which she disagrees. Bill and Ted file a complaint with the New Mexico Human Rights Commission, but they know that such complaints can take a while to adjudicate and, in the meantime, they need a wedding cake.

So Bill and Ted go to ABC Cake Shop, where the owner, Alice B. Chittendon (okay, I made that name up), tells Bill and Ted that she would be delighted to have their business. She takes their order and then asks her employee, Jane, to bake the cake. Jane tells Alice that she, Jane, doesn't want to bake the cake because she disagrees with the view that a same-sex marriage can be blessed. Alice tells Jane that she can't have her employees deciding on a cake-by-cake basis whose business to accept, and that if she doesn't bake and decorate the cake for Bill and Ted, Jane will be fired.

Jane pretty clearly does not have any kind of First Amendment claim that she is entitled to keep her job as a baker. Why not? Because the First Amendment, like nearly all of the rest of the Constitution, only applies to the government, and here it is Jane's private employer, not the government, who has told her to bake the offending cake. There's no state action, and thus no unconstitutional state action.

Juxtapose that result with the result sought by the critics of the New Mexico Supreme Court decision in Elane Photography. They say that (the real and presumably my hypothetical version of) Elane is entitled to a free speech exception, even though the burden on (the actual) Elane--a declaratory judgment and attorney fees--is substantially less than the burden on Jane--loss of her job. Put differently, to say that there are free speech exceptions from public accommodations laws means that there are such exceptions for employers, but not for employees.

Now, it might be objected that I've gilded the lily here, because we can produce lots of seeming anomalies by juxtaposing results from domains in which there is state action with results from domains in which there isn't. And that would be a fair objection were it not for the fact that even when the First Amendment does apply, it affords employees very little protection.

Suppose that Sam, who is also opposed to same-sex marriage, bakes for a cafeteria at the University of New Mexico, which is a state actor. Let's suppose that Hillary and Gloria are UNM alumni and that they are having their wedding and reception on campus, and that the cafeteria is baking and decorating a cake with the inscription "Blessed Marital Bliss for Hillary and Gloria." Sam is told by his government boss to bake and decorate the cake. Sam declines on free speech grounds. Here there's state action, but Sam loses anyway, pursuant to the employee speech doctrine. As the SCOTUS summarized the doctrine in 2006, in Garcetti v. Ceballos, government employees cannot be disciplined for voicing their opinions, as citizens, on matters of public concern, but that right does not extend to speech within the scope of the employee's official duties--as decorating a wedding cake surely would be for a baker.

It might still be objected that all I have done here is to show that people with more money get to exercise their rights more effectively than people with less money. The First Amendment isn't offended when a billionaire pays for political speech that I can't afford to pay for, and so, according to this objection, it's likewise not offended when Elane is given an exception that Jane and Sam do not get. In this view, the law doesn't give Elane an advantage; her money does; if Jane and Sam had the capital and know-how to start their own bakeries (or photography businesses), they would be on an equal footing with Elane.

I think there is something to that objection, but that it misses a big piece of what's going on in the employee speech cases. Those cases do not, after all, rest on the public/private distinction, because both Elane and Sam are having their freedom restricted by the government. Rather, the employee speech doctrine rests on the premise that when one enters the realm of the market, one has less expressive freedom than one enjoys when speaking (or otherwise acting) simply as a citizen. At least where, as here, we are trying to decide whether to extend free speech protection to a new class of claimants, I don't see a very good reason to extend it to business owners, given the (much more substantial) restrictions we tolerate for employees.

Postscript: In one of the examples above, the setting is a public university. Readers may wonder whether I mean to suggest by this example that the same employee speech rules apply throughout the public university--e.g., whether I mean that a biology professor or a poli sci professor with unorthodox views would have no stronger claim than the baker. The answer is no. I mean to express no view whatsoever on the relation between academic freedom and the First Amendment, at least not today.

Monday, March 24, 2014

Public Accommodations and Economic Citizenship

By Mike Dorf

(Updated at 10:12 am Eastern Time and again at 1:54 pm Eastern Time)

Later this morning, I'll be recording a discussion of the Elane Photography case for a National Constitution Center (NCC) podcast to be posted soon. By the time you read this post, the Supreme Court will likely have made an announcement either granting or denying cert in the case, so the discussion should be timely. (Update 1: The SCOTUS took no action on the case today, so a cert decision will come later.)

The discussion will be moderated by NCC President (and GW Law Prof) Jeff Rosen, and will include both me and U Chicago Law Professor Richard Epstein. Once it's ready, I'll post a link to the audio in an update to this post and, depending on how the discussion goes, I may have a follow-up post. (Update 2: Audio now available here.)  Here I want to address an issue that I've been pondering in thinking about the discussion.

The format for the NCC program is a discussion, rather than a debate, but it's fair to say that Professor Epstein and I will have different views.  My view, which I expressed in an amicus brief before the New Mexico Supreme Court, in a Verdict column, and in a prior post, is that, in general, commercial enterprises are not entitled to free speech exceptions to anti-discrimination laws that target discrimination, even though that means that in order to offer their services in the marketplace, business owners and their employees will sometimes need to engage in actions that communicate messages that they do not believe.

I simply don't see a good way to exempt wedding photographers opposed to same-sex marriage from a public accommodations law without thereby also entitling bakers, florists, invitation printers, bartenders, clothiers, and virtually all other service providers from such a law. Elane Photography's own reply brief seems to make this point unwittingly, offering "print shop professionals"--read, owners of Kinko's franchises--as an example of the sort of people who will face censorship if the New Mexico Supreme Court decision is allowed to stand. In an era when everything from toast to pencil sharpening can be called "artisanal", there is no principled way to hold the line at photographers. Indeed, the application of ordinary right-not-to-speak and right-not-to-associate case law to commercial public accommodations could give even non-artisanal service and product providers an exemption from anti-discrimination law, as they could argue that the required act of association itself compels them to "express" the repugnant view that they do not find such association objectionable.

To my mind, there are at least three possible doctrinal routes to the result that I favor.  One would be to say that public accommodations laws, as applied to commercial enterprises, are narrowly tailored to advance a compelling interest in equality, and so that even assuming that such laws should be subject to the strict scrutiny that applies to full-on infringements on free speech, the infringement is justified. This was more or less what the Supreme Court said in the association context in Roberts v. United States Jaycees, when it upheld a sex discrimination ban as applied to a private association. Concurring in that case, Justice O'Connor offered a somewhat different view, arguing that the right of expressive (non)association is greatly diminished in the commercial context, and that approach could be extended to cases in which the objection is not to the message expressed by the compelled association itself but to the message expressed by the service or product provider's service or product. In one variant of this O'Connor approach, the fairly forgiving O'Brien test would apply.  In another, there would be no free speech scrutiny at all, as the infringement would be deemed completely incidental. Either way, the application of the public accommodations law would be upheld.

Professor Epstein believes and has written that laws forbidding employment discrimination are wrongheaded. His views about public accommodations are more complex. In the book to which I just linked, he says that the original 1964 Civil Rights Act was justified in including a provision forbidding race discrimination in public accommodations because, he says, Jim Crow was a system of racial segregation that was entrenched through law and coercive social practices. Federal law was thus necessary, he says, to disentrench it. But in the absence of the sort of systemic public/private/social pro-discrimination partnership that was Jim Crow, his view about public accommodations appears to be more or less the same as his view of anti-discrimination law more generally: Namely, that law is unnecessary to combat discrimination because market forces will address it; an employer who does not discriminate based on race, sex, etc., will be able to draw from a larger pool of talent than one who does, and thus will enjoy an advantage in the marketplace. Likewise, a business that does not discriminate against customers based on illicit grounds will have more customers.

Although I disagree with his conclusion, I think that Epstein's market analysis is partly correct. But even accepting his framework, there are two important limits to the upshot of his argument.

First, in small homogeneous communities, there may be sufficiently few minorities and the majority "taste" for discrimination may be sufficiently large that members of protected groups really cannot find any service providers. The Volokh/Cato/Carpenter amicus brief in Elane Photography notes that there are over 100 wedding photographers in the Abuquerque Yellow Pages and asserts that "most wedding photographers would likely be happy to take the money of anyone who comes to them." I'm willing to concede that this is probably true, but Albuquerque is a city of over half a million people. The rest of New Mexico's over 2 million citizens live in towns and cities that are substantially smaller.  The second largest city in New Mexico has less than a fifth of the population of Albuquerque. (NM population 2010 census data here.) The options for same-sex couples in the rest of New Mexico may be substantially more constrained.

Second, the point of public accommodations law is not just to ensure that everyone can find some service provider who doesn't turn him or her away based on forbidden grounds. After all, African Americans in the Jim Crow South could typically find some restaurants and motels that would take their money--but only at facilities that were segregated by race. Likewise, even in the heyday of the closet, LGBT Americans could go to specifically "gay bars" and the like. But that hardly excuses the racist or homophobic restaurateur or bar owner from operating a whites-only or straights-only business.

In short, one central feature of public accommodations law is to ensure that any citizen can get service at any business. Public accommodations laws serve to create and protect a form of economic citizenship, and not merely the kind of second-class economic citizenship that a regime of segregation affirms. For this reason, a legal regime in which exceptions to public accommodations laws are granted to expressive businesses would undermine such laws at their core, not their periphery.

Friday, March 21, 2014

Can the Illogic of Orthodox Economics Be Overcome By Being Comparative or "Practical"?

-- Posted by Neil H. Buchanan

In a post here on Dorf on Law a few weeks ago, I returned to the question of whether there is any coherent meaning to the concept of economic efficiency.  There isn't.  A few years ago, after having spent many years trying to get people to stop calling things efficient or inefficient, because the terms have no content, I gave a talk at a conference in which I announced a change of strategy.  Specifically, I told people to call everything that they like efficient and everything that they dislike inefficient.

This suggestion, although admittedly cheeky, was based on two ideas.  First, this is what orthodox economists do all the time, apparently in most cases without being aware that they are doing so.  And second, a person who takes my advice would always be right (even though she would also always be wrong).  That is, there are defensible assumptions and baselines that can make any situation or policy appear to be efficient or inefficient.  If I call Policy A efficient, I am thus both right and wrong.  So why be a pessimist?!  If it can be right to call something I like efficient, then why not do it?

This would, I hope, have the additional benefit of devaluing the word efficiency, so that perhaps over time people would stop using it, because it would no longer communicate anything useful.  Kind of like "freedom," "hero," and "ideas guy."  Orwell would be proud.

As I discussed in that recent post, my anti-efficiency argument proceeds from the same premise that motivated the now-famous Murphy/Nagel argument about taxes.  Because there is no economy without a government to define and enforce the laws of property, contract, and so on, and because different (completely legitimate) choices about what those laws might entail lead to wholly different social and economic outcomes: (1) It is logically incoherent to talk about a "before-tax" amount of income, meaning that no one (not the individual, not the society, not the government) owns before-tax income, because there is no such thing as before-tax income, and (2) There is no single, meaningful baseline from which to measure efficency.  Point (1) is the Murphy/Nagel point (versions of which others have made).  Point (2) is my point (versions of which others have made).

One possible objection to my point (and possibly to Murphy and Nagel as well) is that I am being too demanding.  Even if there are different hypothetical worlds in which we could live, each of which could lead to different conclusions about what is efficient or not, we only live in one world.  Can we not define efficiency in a meaningful and unique way in the here and now?  The answer is no, for two reasons.  First, taking current endowments, laws, and so on as the proper baseline simply locks in the very rules that we are supposed to be debating and considering changing.  If we define efficiency against a baseline that takes current distributions as presumptively correct, then of course any deviations from that baseline (most obviously, redistributive fiscal policy) will necessarily be inefficient.

More fundamentally, the second reason that we cannot simply take "today's real world" as the proper baseline is that doing so requires deciding which parts of today's reality are up for debate, and which are not.  Unless we simply rule out any changes at all, in a Panglossian everything-is-for-the-best sense, then we have to have some decision rule to say that some property laws can be changed, while others cannot, or that antitrust enforcement will be aggressive or not, and so on.  Economic theory provides no such decision rule, and the economists who make grand pronouncements about the inefficiency of government policies (like the guy who was upset about the ACA's effect on labor supply decisions, whose arguments I ridiculed in my earlier post) simply make unspoken choices about what is changeable and what is not.  That is not science.  It is merely opportunistic advocacy hiding behind a pretense of objectivity.

Perhaps, however, there is an even more stripped-down version of efficiency that could be available.  Rather than obsessing over baseline endowments of laws, talents, opportunities, inherited wealth, and so on, maybe there is a way to compare two policies, or two choices that an individual might make, such that one could say that one choice is more efficient than the other.  That is, even if it is not meaningful to say that A is efficient and B is inefficient, maybe it could be meaningful to say that A is more efficient than B, without getting into the whole baseline mess.

For example, people often think of efficiency in the colloquial sense rather than the economic sense.  A person can say, “My car is using its gasoline efficiently” without making assumptions about underlying tort laws or international treaties, for example.  Of course, even in this example, the speaker is making background assumptions, such as how many miles her car—or perhaps cars in general—can travel on a mile of gasoline.  But as a friend recently put it to me: "Sure, we can’t say whether a Prius is efficient in an absolute sense, but we can say that a Prius is more efficient than a Hummer."

Actually, we cannot even say that.  Or, more precisely, the sense in which we can say that is true only under a different use of the word efficiency.  In orthodox economic theory, there is an important distinction between "technical efficiency" and "economic efficiency."  Technical efficiency means using available technology in the way that gets the most output from the least input.  If, for example, it is possible to securely seal food cans using 3 ml of molten metal, then using 4 ml is technically inefficient.  A Prius is more efficient than a Hummer in that sense, which means that you can get from Point A to Point B using fewer gallons of gasoline.

The problem is that these stylized comparisons only work, even on their own terms, if we have already agreed that the only thing we care about is the amount of gasoline burned per mile traveled, for that particular task.  A Hummer can be more efficient, even on technical grounds, if the task is different, e.g., not just getting a person from point A to point B, but for getting a huge load of material from A to B.  It depends on what you are trying to accomplish.  Still, one could object that it is possible in each of those discrete situations to describe one choice as more efficient than the other.  For moving one person, a Prius is more efficient than a Hummer, whereas for moving a load of iron ingots the same distance, a Hummer is more efficient than a Prius.  Even that, however, does not save the notion of economic efficiency.

As I described in a Dorf on Law post last August, one can describe something that is much more expensive as being more efficient, if one cares about a different set of criteria.  In an example that I noted there, it is possible that the (very expensive) traditional military academies are more efficient than Officer-and-a-Gentleman-style officer training schools, if one believes that the academies provide a different product.  Which is more efficient?  It is not enough to say that one is more efficient for one purpose, and the other is more efficient for another purpose, because you have to agree on the purpose to decide whether you want to continue to support the more expensive option.  Certainly, it is not meaningful (even in the narrow economic sense) to describe the academies as inefficient -- or even less efficient -- merely because of their price tag.  The Prius/Hummer example at least allowed us to say, "If I know the technical facts, I can tell you which one will use less gas for the task at hand."

Even in the military academies example, one could make a similar move: "Well, one training system is more efficient for one set of goals, and the other is more efficient for the other set of goals."  But that is precisely the difference between technical efficiency and economic efficiency.  Economic efficiency means that one chooses from among the technically efficient options to maximize net social welfare.  Comparative efficiency means choosing between the options under consideration based on which option would have higher net social welfare.  But measuring net social welfare in a consistent way requires an agreement about what to include in our measure of social welfare.  And then we are back to the baseline problem.

Another way to put this is that it is possible that choosing between two policies can be misleading, because one can choose a policy on the basis of an incomplete understanding of the full implications of that policy.  For example, I have argued in the past that the U.S. should increase infrastructure spending.  What if that spending is used to build more roads?  Is that more efficient than not spending at all, or not?  Is it more efficient than using it to build better public transportation?  Than using it to allow more people to work from home?

I think that I could make defensible arguments about whether and how to spend infrastructure dollars, but that is only because I know my prior commitments.  But the point is that I could plausibly say, as a comparative matter, that we should spend more on roads rather than spending nothing, only to find that I have moved the economy in the wrong direction, increasing pollution and sprawl, reducing the usage of existing public transportation, and so on.

Yes, there are situations in which it will seem easy or obvious to compare and choose between a limited number of options.  Those situations, however, will be easy or obvious only because we will have (probably unconsciously) decided that the full consequences of those decisions -- the spillover effects -- are unimportant or are likely to be insubstantial.  And we might be right.  But this kind of atheoretical move is not really a matter of saying that one policy is more economically efficient than another.  It says only that we can sometimes agree to close our eyes and hope that we are not making matters worse.

Efficiency in an economic sense is, therefore, not even meaningful as a comparative term.

Thursday, March 20, 2014

A Bit of Sixteenth Amendment Originalism

-- Posted by Neil H. Buchanan

One of the pleasures of teaching the same course many times is that one occasionally sees issues from an unexpected perspective.  Often, this happens in response to an out-of-left-field question from a student, or sometimes it is just a matter of seeing something as if for the first time.  No matter the reason, I had such an experience this week in my Federal Income Taxation class.

On Tuesday, we discussed Eisner v. Macomber, the famous 1920 case in which the U.S. Supreme Court decided, 5-4, that it violates the Sixteenth Amendment for Congress to tax income that has not been "severed" from its original source, for a taxpayer's "separate use, benefit and disposal."  It is an utterly confused opinion, which has been roundly repudiated by scholars and courts, with the Supreme Court itself distinguishing Macomber effectively out of existence in 1940's Helvering v. Bruun decision.  Even so, most tax professors still teach Macomber because of its historical significance, and because it is a way to introduce the fundamental concept of "realization," which is when taxpayers turn appreciated (or depreciated) property into cash.  (There are some other ways to realize gains or losses, but cash sales are the paradigm case.)

Eric Segall's guest Dorf on Law post earlier this week discussed a recent conference in which various leading legal lights argued the relative merits of originalism and the theory of "living constitutionalism."  As I went over the Macomber case in class later that day, I took special notice of the dissent that Justice Holmes filed in the case.  (The other dissent was written by Justice Brandeis.  As I tell my students each semester, it is obviously not a sure thing that Holmes and Brandeis are right, but it should not be surprising if the 5-justice majority that opposes them turns out to be confused.)  In order to understand Holmes's dissent, a bit of technical background is necessary.

The government had assessed a tax liability on a part of the "gain" received by Ms. Macomber when Standard Oil of California issued a "stock dividend."  Although not technically identical, a stock dividend can usefully be thought of as a "stock split."  In this instance, every shareholder in the company exchanged 2 old shares for 3 new shares of the company.  Measured at a benchmark price called "par value," which in this case was $100 per share, it therefore appeared that Ms. Macomber and every other shareholder were 50% richer than before.  Ms. Macomber's 1100 additional shares (after turning 2200 shares into 3300 shares) thus seemed to make her $110,000 richer.

Of course, as a matter of economic reality, no shareholder was richer than before.  This is logically equivalent to cutting a pie into 6 slices, where two people own 3 slices each rather than the 2 each that they would have owned had the pie been cut into 4 slices.  The pie's size does not change, so if you own half of the shares, you own half of the pizza.

This makes the government's position in the case appear to be quite stupid.  Why would the IRS assess tax on an illusory $110,000 gain (reduced to just under $20,000 for reasons not germane here), when everyone knew that Ms. Macomber's net worth (like those of other SoCal shareholders) had been unaffected by the issuance of the stock dividend?

The answer is simple.  The IRS was -- as so often happens -- blamed for faithfully applying a nonsensical law that Congress had written.  Specifically, as the majority opinion in Macomber notes, the Revenue Act of 1916 (the updated version of the original income tax act passed in 1913, after the adoption of the Sixteenth Amendment) stated that "stock dividend[s] shall be considered income."  That is, Congress did not merely write the tax law in a sloppy way that happened to sweep some non-income into the definition of income.  It wrote the law unambiguously to say that income includes the illusory gains from the issuance of a stock dividend.

Enter Holmes.  In his brief dissent, he essentially takes an originalist view: "I think that the word 'incomes' in the Sixteenth Amendment should be read in 'a sense most obvious to the common understanding at the time of its adoption.' ...  I cannot doubt that most people not lawyers would suppose when they voted for it that they put a question like the present one to rest.  I am of the opinion that the Amendment justifies the tax."

Note that this decision was issued in 1920, only seven years after the adoption of the Sixteenth Amendment.  I have not checked whether the relevant language in the 1916 Revenue Act existed in the 1913 Act; but even if it did not, the people in Congress who defined stock dividends as income were overwhelmingly the same people -- not just the same constitutional body, but the same human beings -- who passed the amendment allowing an unapportioned tax on incomes.  Holmes's point, that most people would have thought that stock dividends were income (even though they would be incorrect, as a matter of economic reality) thus applies not merely to the "not lawyers" who voted for the amendment, but to the Congress as a whole that then turned the amendment into legislation.

So, Holmes's simple point is that, as a U.S. Senator put it more recently in a different context, "The people have the right to be wrong."  There are various ways in which to define income, and if we want to know which definition was in the minds of the framers of the Sixteenth Amendment, the language of their revenue acts is pretty darned good evidence of what they thought about stock dividends.

In this view, Congress was thus not required to include stock dividends in gross income in the tax code, but it was not prohibited from doing so by the Sixteenth Amendment.  This, presumably, is the same point that people like Justices Scalia and Thomas make when they say that, for example, we cannot replace the framers' understanding of "cruel and unusual punishment" with a more modern understanding.

Can Congress be counted on to fix the statute, to reflect what we now view as economic reality?  Although the law has been changed such that stock dividends are no longer taxed, there is plenty of evidence that economic reality means nothing to most members of Congress.  (Compare, e.g., the bipartisan ignorance regarding budget deficits and federal debt.)  Holmes's point would be that there is simply nothing, other than the political process, stopping a Congress from taxing what we might think is not really income.

How would the "living" version of this story be different?  The question would presumably be whether it is acceptable for a court to define "income" for Sixteenth Amendment purposes to exclude what is really not income.  Given that an income tax is, by definition, supposed to determine citizens' respective tax responsibilities by measuring their incomes, and especially given that Congress has from the beginning set up the tax system to be progressive (exempting entirely all but the most wealthy people from the federal income tax, in the early years), one could make an ability-to-pay argument for what the word income means, in a living sense.

That is, it is possible -- and probably desirable -- for courts to have the ability to say that the amendment's framers' purpose was to tax income in a substantial sense, not in a formal sense.  If our understanding of what is and is not income changes over time, then the Sixteenth Amendment's coverage would change.  Similarly, in NFIB v. Sebelius (the ACA case from 2012), the Chief Justice's controlling opinion held that it does not matter what Congress calls something (or, presumably, what Congress thinks it is doing), because if it looks and acts like a tax, then it is a tax for Constitutional purposes.

To be sure, one can get to that same living constitution result using "new" or "semantic" originalism.  In this view, widely held by academics who call themselves originalists, the framers of the Sixteenth Amendment enacted a text -- "income" -- that invokes a particular concept, and it is the concept itself, not their subjective beliefs about the concrete applications of the text, that is fixed as the constitutional meaning.  So I am describing a contrast between living constitutionalism and the "old" intentions-and-expectations originalism that still plays a prominent role in the practice of self-described originalist judges and in the rhetoric of conservative politicians.

What is interesting is that the living constitutionalists' view as I have described it here would limit Congress's powers, whereas a Holmesian originalist view would give Congress more power to tax non-income under the powers granted by an amendment that was supposed to be limited to taxing income.  I am sure that there are plenty of other examples of such a role reversal, but given the centrality of the income tax to the development of the modern federal government, I find this irony to be particularly provocative.

Wednesday, March 19, 2014

Moral Luck and the Endowment Effect

by Sherry F. Colb

In my Verdict column for this week, I discuss the case of Burrage v. United States, in which the U.S. Supreme Court held that for a defendant's heroin distribution to have "resulted" in a death, it has to be the case that the heroin customer would not have died "but for" his use of the heroin in question.  I use the Court's decision as an occasion to consider the central role that "causing harm" has played in assessments of culpability and punishment.  Since differing outcomes (and thus the causal relationship between defendants' actions and those differing outcomes) are so often outside the hands of the defendants, I examine the legitimacy of punishing identically situated defendants differently on the basis of a fortuity, on the basis -- in other words -- of "moral luck."

Moral luck refers generally to the assessment of moral judgment against someone for things that lie beyond that person's control.  Treating a successfully completed crime such as murder more harshly than an inchoate crime such as attempted murder represents one example.  As I discuss in my column, and as others have discussed far more elaborately, we do in fact assess blame in ways that can turn significantly on matters that lie outside the culpable individual's control.  I offer a limited account of why that might be understandable or acceptable.  Others have suggested that it may indeed be unavoidable.

In this post, I want to explore another sort of luck that seems to carry moral implications in our blaming practices and in the law:  the luck involved in receiving (or being endowed with) goods and qualities without having earned those items.  One might make (and some have made) an argument that all criminal activity is a matter of moral luck, because the life experiences and characteristics that we have that lead some of us to commit crimes and others of us to refrain from doing so are entirely matters of our privileged birth, our inborn characteristics, and our environment growing up and beyond.  But in referencing the luck that determines our goods and qualities, I refer more narrowly to our "right" to have the things that we have been given, including our bodies.

Consider our bodies.  The most fundamental right we have against interference by the government and by private parties is the right to our own bodily integrity.  If the government wishes to take your blood, for example, to test for its blood/alcohol concentration, it needs to first have a warrant certifying probable cause to believe that you have been engaged in some illegal activity of which blood/alcohol content would provide evidence, such as driving while intoxicated.  If instead, the government (or a private party) wishes to take your blood to give it to someone else who needs a blood transfusion, it may not do so without your consent. And this is true despite the fact that the other person might die without your blood, and you probably have enough blood to spare some without experiencing any ill effects.

From a cost/benefit perspective, it would seem that there ought to be a redistribution of blood from people who have more than they need (and can rapidly manufacture more, once they donate) to people who desperately need a transfusion.  Yet there is not even a movement called "Occupy Healthy Veins."  We have blood drives, at which people may voluntarily donate blood for those who need transfusions.  But no one is required to donate, and a forcible donation would represent an assault and battery and -- if performed by the government -- a Fourth Amendment violation as well.

What does this have to do with luck?  Well, the person who loses blood because he was run over by a car or because he has hemophilia or was the victim of a violent attack did nothing culpable or wrongful that would have given him any less of an ex ante entitlement to having enough blood than you or I have.  Yet through a misfortune that happened to visit him and not you or me, he needs something that we have, and he needs to get it far more than we need to retain it.  Yet, in the face of (and because of) his misfortune in losing blood and our fortune in having it, we are entitled to say "I don't feel like donating blood to you" and to have that wish respected, even if the result is the other person's death.  And not only is this the law, but most of us would be extremely uncomfortable with a system of government that forcibly extracted blood from people to serve the one in need.

Even more dramatically, a person who chooses not to donate his or her organs at death (or, in the United States, who fails to affirmatively choose to be an organ donor) can insist on having those organs buried or cremated rather than being taken and given to someone who will die without them.  Just as you or I might easily be able to spare a pint of blood for donation, a dead body to be buried or cremated can certainly spare a heart or other organ, since organs do not perform any function and simply die if kept inside the body of a person who has already died.  Yet through the fortuities of life and death, the dead person happens to have a functioning organ and a living person who needs such an organ happens not to have one, and the law keeps it that way, absent consent to donate.

In behavioral economics, the experience we have of more highly valuing something we already own than we would value the very same thing if we did not own it is sometimes called "the endowment effect" (although variants on it fall under the rubric of "loss aversion").  For example, people in experimental settings are typically willing to pay more to keep something that they have already received than they are to purchase the same thing that they do not yet have.

I see a version of this phenomenon in my children.  If they want something, they are not as attached to the idea of having it as they become once they have been given that same thing (until a week later, when they have completely lost interest in the same thing).  A candy bar on the grocer's shelf is worth pleading for, but a candy bar that I just purchased for them but then took away (because, for instance, the recipient began gloating to her sister about having a candy bar) is much more likely to elicit tears.  From a strictly rational perspective, not receiving the candy bar should be the equivalent of receiving it and then, one second later, having it taken away.  Yet people rapidly come to view a thing as "theirs" and feel very upset at the prospect of losing it, as though they lost more than they would have failed to gain, had they not received the item in the first place.

It seems apparent that the reward systems in our brains respond differently to the prospect of having or not having a thing that is not yet ours versus keeping (or not keeping) a thing that we already have in our possession.  In some deep sense, then, we have a shared, biologically-based intuition that when something becomes "ours," that status has real content, and it becomes more "unfair" (as one of my daughters would say, if I took back a candy bar) to have it taken away than it would have been not to have received it in the first place.  I believe that our intuitions about our rights to our property and to our blood and to our bodies emerge from this same sort of effect:  one who already has something has a greater entitlement to it (even if he did nothing to "earn" it) than someone who does not yet have it.

As a thought experiment, I imagine how I would feel about a situation in which a person, [A], donated a kidney to another person, [B].  Prior to the donation, my intuition (and others' too, I suspect) is that [A] has the right to refuse to part with a kidney, even though [B] may need the kidney to survive, and [A] can part with it and survive.  If I imagine, however, that a year after [A] donates a kidney to [B], [A]'s one remaining kidney fails, and [A] needs a transplant, things change.  At this point, the kidney that originally belonged to [A] now belongs to [B], and my intuition is that [B] gets to keep it, and [A] must attempt to get a new kidney elsewhere.  This is despite the fact that it was originally  [A]'s kidney that [B] now has and that [B] might be dead right now and [A] in perfect health, if [A] had not generously made the donation in the first place.

Though my intuitions here are strong, I do find them somewhat perplexing.  They make me wonder, for example, whether such intuitions exist to reduce the amount of violence and chaos in life, a result when society shares the view that -- at least when it comes to body parts, blood, and other similarly intimate matters -- we each have sovereignty over what we have, regardless of how unearned and perhaps undeserved the allocation might be. There is perhaps a purely utilitarian explanation for the status-quo preference that seems, on occasion, to violate the principal of utility (such as when the person receiving the blood would benefit more from its forcible extraction than the person losing the blood would lose from it).

I find disturbing the notion that what appears to be a deontological moral intuition (that each individual is entitled to bodily integrity) may rest on fortuities and may also simply reflect an evolutionary cost/benefit analysis that says that if people could easily appropriate others' "stuff," then there would be great and constant violence and chaos.  But in this case, I find it hard to otherwise explain my strong intuition that those lucky enough to have enough blood should be able to refuse to share that blood with those without similar fortune.  And my theoretical discomfort with this strong intuition may help account for my feeling far less of an intuition that the riches people happen -- either entirely or primarily through luck -- to own should remain with them, regardless of others' need.

The accepted legitimacy of income taxes may thus testify to the limited reach of the moral intuition that what is mine should remain mine and what is yours should remain yours.  In a community, we sometimes legitimately require sharing and redistribution, in part because of the role of chance in the initial allocation.  But there are limits to that legitimacy, and bodily integrity seems a good place to draw the line.

Tuesday, March 18, 2014

The Day the Constitution Lived (Guest Post by Eric Segall)

by Eric Segall

Last week in Atlanta, the Georgia bar celebrated the 225th anniversary of the United States Constitution by holding a hall of fame legal conference.  The participants included Supreme Court Justice Antonin Scalia as well as appellate heavyweights Richard Posner and Alex Kozinski, and a bevy of our most prominent constitutional law professors, commentators, and Supreme Court reporters. Although there were many themes to the conference, the most consistent thread was the tension between those who believe in a “living” constitution and those who believe in a Constitution defined by its “original meaning.”

The proceedings began with ultra-liberal Erwin Chemerinsky and arch conservative Richard Epstein debating whether the Constitution is dead or alive. Chemerinsky observed that if the Constitution only has the meaning it did when ratified, then racial segregation in public schools would be constitutional, women would not have equal rights, and Congress would be disabled from passing minimum wage laws and overtime regulations.  Epstein emphatically denied that a dead Constitution would lead to racial segregation or the denial of equal rights for women, but he was positively giddy about the idea that Congress would be deprived of most of its power to regulate the national economy (and didn’t deny such would be the effect of a “dead” Constitution).

Chemerinsky insisted that everyone, including Justices Scalia and Thomas, as well as Epstein himself, believes in a living Constitution when it suits them to do so.  Though Epstein denied the charge, he gave the game away when he said that all regulations that reduce the value of a person’s property constitute a takings under the 5th Amendment and require just compensation from the government.  I don’t know if such a radically private property protective world would be better or worse for our economy, but it is much more in line with an imaginative future than any recognizable past.

The second day of the conference brought together Supreme Court reporters and bloggers.  Amy Howe justifiably lamented that SCOTUS Blog doesn’t have a media pass to the Supreme Court (an absurd oversight by the Justices given the Blog’s important role in covering the Court).  Adam Liptak of the New York Times had one of the best one-liners of the three days when he responded (politely) to a question from Georgia Supreme Court Justice David Nahmias who was concerned about how judges are covered in the media.  Liptak said in a dead pan voice, “if we get a leak that is news worthy and if that makes your life more difficult that is of absolutely no concern to me."

Both Liptak and Howe agreed that television cameras should be allowed in the Supreme Court, but warned everyone present not to hold their breath.

The afternoon of the second day brought a panel on the Second Amendment (which I organized) and another heated conversation about how judges should go about interpreting a document ratified when it took a full nine seconds to load a gun to fire a single bullet. Nelson Lund suggested a robust reading of the Second Amendment strongly protecting gun rights. Sandy Levinson and Adam Winkler argued that the private right to own guns should be protected, but they would allow the right to be over-ridden by most reasonable legislation, and I argued that Judges Posner and Wilkinson have persuasively made the case that the Second Amendment should only apply to the militia, meaning not at all. We all found common ground, however, and unanimously agreed that the Court’s reasoning in its landmark gun case, DC v. Heller was unpersuasive, inept, and completely oblivious to the most relevant and important history of the Second Amendment.

On Friday the really big guns came out. First Judges Posner and Kozinski, along with Justice Nahmias, talked about what it is like to be lower court judges who have to wrestle with Supreme Court precedent. Whether the Constitution is dead, alive, or something in between, they all agreed that they have a duty to apply it as the highest Court tells them to, but they also agreed that in real life rarely did the Court issue a decision that was clear enough for them to actually follow.

Judge Posner made his usual case that judges often have discretion when deciding cases and that facts and consequences should matter much more than legal rules and prior cases.  He also quipped that “there is nothing as ridiculous as the canons of construction, other than the Blue Book,” referring to the writing manual law students see in their nightmares.

Judge Kozinski told a long and eloquent story about the trials and tribulations of trying to decide between deciding a case the way the Supreme Court did a long time ago, or trying to predict whether the Justices will veer from that old law in the next case.  He persuasively suggested that trying to figure that out is a fool’s errand (a lesson most of us should take to heart).

Justice Scalia was the last person to take the stage.  For about forty minutes, he ranted and raved about how liberals “don’t really want a living Constitution, they want a dead one where rights apply everywhere,” and how “abortion, same-sex sodomy, and (maybe) assisted suicide” were not protected then and therefore “shouldn’t be protected now.” His diatribe about the evils of a changing Constitution may have been more persuasive had he explained exactly when in our history corporations became people whose first amendment speech rights made them immune from campaign finance reform.

Justice Scalia delivered a number of interesting and entertaining one liners:

"Everyone was an originalist before the Warren Court.  Judges distorted the Constitution the old fashioned way-they lied about it."

"I don't have to be a historian; I just have to be a judge who can tell the good from the bad.”

"Congressional committee reports are signed by no one and probably written by a teenager."

"That question is a softball ... it reminds me of my confirmation hearing where Strom Thurmond asked me what I thought of judicial activism."

That last line came while Scalia was answering written, prescreened anonymous questions. The very next unsigned question was one that I had written. I asked him how he could sign on to Justice Roberts’ opinion in the recent voting rights case (Shelby County v. Holder) which announced a brand new constitutional principle-that Congress could not treat different states differently without a really strong reason-given that this limitation is nowhere in the text of the Constitution nor supported by its original meaning.  Scalia fumbled a bit, said he didn’t read the case that way, and then asked who wrote the question.  I was sitting in the front row and made eye contact with the moderator to see if he wanted me to identify myself. He motioned for me to rise so a microphone was brought over and I nervously repeated the question. I don’t often argue with Supreme Court Justices in front of a full house. Scalia again fumbled, and then said I read the case wrong and the decision only required a rational basis (not a strong reason) for Congress to treat different states differently. I will let history be my judge on this dispute (I’m right) but I was most interested to hear Scalia go on to say that, even if Congress had a rational basis for treating different states differently at the time of the Civil War, that rational basis no longer exists in today’s United States, so the Shelby County Court was correct to rule the way it did. In other words, what “equal state sovereignty” meant in 1868 is very different than what it means today, as a matter of constitutional law.

I agree with Scalia’s approach, and would use the same method of interpretation for principles like “equal protection of the law,” and “cruel and unusual punishment,” and the living Constitution lives on for at least another day.

Monday, March 17, 2014

Does the Dormant Commerce Clause or Federal Pre-emption Shield Out-of-State Egg Farmers From California Animal Welfare Laws?

By Mike Dorf

Late last year, I blogged about the then-proposed King Amendment to the Farm Bill, which would have precluded states from regulating agricultural products more strictly than sister states.  The amendment was not enacted but a pending federal lawsuit--originally filed by Missouri but now joined by four other states plus the governor of a fifth, aims to achieve through litigation the core of what the King Amendment aimed to achieve through legislation.  According to the amended complaint in Missouri v. Harris, California cannot legally enforce its law forbidding the sale of eggs produced by methods other than those approved in Proposition 2 by California voters in 2008.

In 2008, California voters approved Prop 2 by a nearly two-to-one margin. The provision regulates the conditions of confinement of animals raised for food in California, requiring that each animal be given sufficient room to lie down, stand up, turn around, and spread his or her limbs. Thus, effective in 2015, California will no longer permit gestation crates for pigs, veal crates, or battery cages for hens.  In 2010, California enacted a law that forbids the in-California sale of eggs produced anywhere, unless they were produced in accordance with the same standards as those that implement Prop 2. The lawsuit by Missouri et al challenges that application of California standards to eggs produced outside of California on grounds that it violates the dormant Commerce Clause and/or is pre-empted by the federal Egg Products Inspection Act.

Regular readers of this blog know that I am ambivalent about such regulations. If animal agriculture is inevitable, then I think that measures like Prop 2 are marginally better for the captive animals than leaving the industry unregulated because such measures do reduce suffering a little--although even the pigs, cows, and chickens raised for food under so-called humane conditions are subject to horrific suffering. Perhaps campaigns for laws like Prop 2 raise consciousness more generally, so that people who voted for Prop 2 in 2008 will come to value animal interests more broadly and eventually stop participating in the mistreatment and killing of animals. But there is also the possibility that the marginal improvements like Prop 2 reassure people who really do care about animal interests that they can eat their bacon cheeseburgers with a clean conscience. In my view, the question of whether measures like Prop 2 ultimately do more harm than good is a complex empirical one about which we do not have sufficient information to reach a definitive conclusion.

All of that is by way of full disclosure: As a critic of Prop 2 from "the left", as it were, I have less of a moral investment in its surviving a legal attack than one might think. Put differently, I'm interested in this topic chiefly as a constitutional law scholar, and only secondarily as a vegan.

The complaint cites various bits of the legislative history of the California legislation to show that the purpose of extending Prop 2 to out-of-state egg producers was to "level the playing field." Complying with Prop 2 will substantially increase the capital cost and somewhat increase the marginal cost of egg production, and thus absent the legislation applying the same standards to out-of-state producers, Prop 2 would confer a competitive advantage on the out-of-state producers. Accordingly, the complaint alleges that the legislation is protectionist in violation of the anti-discrimination norm of the dormant Commerce Clause.

The law itself cites a health purpose, not a protectionist purpose.  The law cites a Pew Commission report stating that animal products pose fewer risks to human health when the animals producing those products are treated well. The complaint alleges that the health benefits of the law are illusory, pointing to studies that reach different conclusions, and arguing that, in any event, the health justification was pretextual in light of the legislative history.

This claim strikes me as weak. The law is not facially discriminatory. It imposes the same standards on all eggs offered for sale in California. Thus, the burden will be on the plaintiffs to show that their health studies are clearly right and California's studies are clearly wrong. To the extent that I have a view about this matter, I think I'm probably closer to that of the plaintiffs, but for reasons that they will hardly like and certainly wouldn't introduce in evidence.  Namely: The harmful effects of egg consumption on human health are so large that it's hard to take seriously the state's asserted interest in human health, even if Prop-2-compliant eggs are slightly less dangerous to humans than non-Prop-2-compliant eggs.

But even if the plaintiffs succeed in showing that the real purpose of the legislation was to "level the playing field," that does not count as a discriminatory purpose where, as here, the field is being leveled from a point that is made unlevel by another California law. Suppose that a certain kind of bean grows fastest in soil that is naturally found only in Missouri. If California were to enact a law that requires that sort of bean to be grown in the inferior kind of soil found in California, that would be a de facto protectionist measure.  Although neutral on its face, the law would simply aim to take away an advantage that Missouri beans naturally enjoy.

By contrast, where, as here, another provision of California law confers an advantage on out-of-state egg producers, a law that "levels the playing field" in the sense of applying the same standards to out-of-state egg producers yields equal treatment.  That's why the Ninth Circuit rejected the same sort of argument when brought by out-of-state foie gras producers who challenged the state's application of the same standards to them as applied to California producers under a different statutory provision.

The foie gras decision also pretty much disposes of the other dormant Commerce Clause claims--that the law unduly burdens interstate commerce and that it regulates extraterritorially. The standard for winning a challenge to a neutral law on the ground that it unduly burdens interstate commerce is very high: the plaintiff must show that the burden on interstate commerce clearly outweighs the law's in-state benefits.  The plaintiff states have studies showing high compliance costs but (much to my chagrin), these somewhat higher production costs may well be offset by the marketing opportunity provided by shifting their facilities to "humane" egg production. The key point here, though, is that "undue burden" dormant Commerce Clause challenges rarely succeed.

Likewise, the claim that the California law regulates extraterrititorially is both precluded by the foie gras case and by basic logic. Any state law that imposes product regulation that takes the form of limiting the sale of an item produced in a certain manner would be invalid under the plaintiffs' theory, but that is plainly not the law.

The plaintiffs have a better argument that the California law is pre-empted by the federal law, but here too I think they should lose. The key statutory language provides that "no state or local jurisdiction may require the use of standards of quality, condition, weight, quantity, or grade which are in addition to or different from the official Federal standards." The plaintiffs say that if the California law is a health measure, and thus doesn't fail the nondiscrimination test of the dormant Commerce Clause, then it is pre-empted as an additional "quality" standard that differs from the federal standard.

I think that argument would work if the California law only aimed at protecting human health. But the law's obvious purposes include the promotion of (or, in my view, the marginal reduction in assaults on) the welfare of egg-laying hens. And the text of the California law says: "It is the intent of the Legislature to protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." (Emphasis added).

The linguistic context of that sentence suggests that the law aims at human welfare, and if so, then it would appear to be a "quality" standard that falls within the scope of federal pre-emption. But it is very hard to figure out how human welfare is enhanced by better conditions for laying hens, apart from health and safety, which are also part of the law's purpose. Thus, I think that read in the overall context, the California law has animal welfare as one of its central purposes. And as such, it strikes me that the law is not pre-empted, because the federal Egg Products Inspection Act is not concerned with animal welfare at all.

But does California have an interest in promoting animal welfare in places outside of California? Is promotion of that interest really an effort to regulate extraterritorially in violation of the dormant Commerce Clause after all? I think the pretty clear answer here is no.  Last year the Ninth Circuit upheld California's fuel standards against (among other things) a claim that in regulating based on carbon intensity, California was regulating extraterritorially in violation of the dormant Commerce Clause.  As in the foie gras case, so too in the carbon tax case, the court affirmed the proposition that a state can validly assert an interest in the process by which a product sold in the state has been produced--even if the production process occurred out of state.

So, on the merits, it looks like the plaintiff states should lose their challenge.  I would note two caveats, however.  First, the court may not reach the merits because there are threshold questions of standing and ripeness.  Second, the plaintiffs do have one somewhat stronger claim that the California legislation discriminates against out-of-state egg producers in that California egg producers were given seven years to reconfigure their plants in order to bring them into compliance with Prop 2, but that the out-of-state producers were only given five years to reconfigure their own plants (because the legislation came two years later than Prop 2). If this is a valid claim, then, pursuant to the law's severability clause, it would entitle the out-of-state producers to an extra two years to comply with the law; it would not result in the law's invalidation.