The mythology of Lochner v. New York

In the highly competitive world of most misunderstood Supreme Court decisions, Lochner v. New York sits high on the list. The reason is simple enough: it has undergone a transcendent ascent to the world of abstraction, where it now embodies the platonic essence of a black-robed cadre of old, straight, white men hankering to smash the plebeian’s face in the dirt.

Yesterday, the Intelligencer–a publication of New York Magazine–dragged out these old tropes with the galumphing rhetoric typical of someone simply parroting a battered playbook with no real concern for its accuracy. The article is entitled, “Conservatives Want a ‘Republic’ to Protect Privileges.” Its basic premise is to push back against the anti-democratic tendencies of those who oppose direct, untrammeled democracy.

The article lists several “limitations on democracy to justify and even expand privilege.” The second references the conservative legal movement’s supposed attempt to resurrect the “Lochner era,” in order to protect the wealthy from democratic majorities.

First, off, it’s wrong to say that the “conservative legal movement” wants to revive Lochner. Both progressive and conservative jurists are generally united in their rejection of Lochner. Robert Bork, a thoroughly majoritarian conservative, railed against the case, as did Justice Antonin ScaliaGranted, this is because the conservative legal movement, sadly, has largely embraced the progressive juridical project of the 30’s, which was devoted to weakening the judiciary in order to shove the New Deal down the nation’s throat.

Second, Lochner‘s many detractors almost never grapple with the facts of the case. As a result, they frequently misunderstand it. Here’s what actually happened. In the early 1900’s, New York enacted a nitpicky law that saddled bakeries with an avalanche of finite requirements–limits on ceiling heights, limits on the kind of floor, and the demand to whitewash the walls every three months, among other things. But the provision dealt with in Lochner was this: “No employee shall be required or permitted to work in a biscuit, bread or cake bakery or confectionary establishment than 60 hours in one week or more than 10 hours in any one day.”

A Bavarian immigrant named Joseph Lochner who owned a Utica bakery was criminally indicted for violating this law. Aman Schmitter, another immigrant, lived with his family above the bakery and worked for Joseph. Aman happily worked over sixty hours a week in order to care for his family and increase his skills, and he said so in a sworn affidavit.

It is undisputed that New York’s law was not about health, safety, or protecting workers, though New York tried to say so at the time. Rather, New York passed the law at the behest of powerful bakeries and baker unions in a patent attempt to crush small, family-owned bakeries that relied upon flexible work schedules. It gets worse–the law intentionally targeted immigrant bakeries in particular, which tended to be of the small variety that leaned on overtime. The state’s legal brief contained a detestable line that progressives today would certainly associate with Trump: “there have come to [New York] great numbers of foreigners with habits which must be changed.” This is the law that progressives who hate Lochner are defending.

In a 5-4 decision, the Supreme Court thankfully struck down this law that was passed to serve the powerful and crush a weak immigrant population. Put that way, it seems startling that anyone today would wish to stand up for this piece of anti-immigrant, protectionist garbage.

But then again, Lochner is no longer about Lochner. It’s about rejecting a mythical “Lochner era.” Progressives believe that Lochner represented an entire ecosystem of turn-of-the-century jurisprudence in which corrupt judges were smothering the will of the people wholesale. Turns out that era never existed. Law professor David Bernstein has examined old court records concerning state exercises of their police power during that time period and found that there simply was no lengthy period in which courts were whack-a-moling every piece of social legislation that dared to lift its head.

To the extent that courts of that era did strike down social legislation under the liberty of contract, they did so not to serve the wealthy, but to protect weak minorities–which is of course why robust judicial review exists in the first place. For instance, the Illinois state supreme court struck down a deeply misogynistic law limiting women’s maximum work hours. The Court used the same liberty-of-contract reasoning as Lochner, arguing that women “are entitled to the same rights under the Constitution to make contracts with reference to their labor as are secured thereby to men.” And in Bailey v. Alabama, the wicked Lochner Court struck down a Jim Crow law that created a presumption of fraud when a worker quit after getting an advance payment. The law was aimed at penalizing black workers–an attempt essentially to revive peonage. Do progressives really want to own up to disagreeing with these “Lochner era” precedents? Somehow I doubt it.

Lochner did not, as Lochner‘s enemies love to claim, replace the legislature’s judgment with the judgment of the Court. Instead, the Court was willing to look skeptically at the legislature’s motives and demand that the legislature do its work and show that a law burdening a basic right is necessary. The New York law failed that test spectacularly.

Of course, Lochner‘s legacy does demand that courts counter democratic will when it conflicts with fundamental rights. Alexander Bickel famously called this the counter-majoritarian difficulty, something that has preoccupied the judiciary for a century. If you really care about minorities, though, you might consider Judge Janice Rogers Brown’s insight: “But the better view may be that the Constitution created the countermajoritarian difficulty in order to thwart more potent threats to the Republic: the political temptation to exploit the public appetite for other people’s money–either by buying consent with broad-based entitlements or selling subsidies, licensing restrictions, tariffs, or price fixing regimes to benefit narrow special interests.”

In any case, if progressives continue to take a polly-anna view of unfettered democracy despite the evidence, they should at least bother to get the facts right on Lochner.

 

Nightcap

  1. FDR’s New Deal state and segregation Colin Gordon, Jacobin
  2. Europe’s Left is rethinking multiculturalism Joel Kotkin, City Journal
  3. The hardest problem in public policy Scott Sumner, EconLog
  4. The last great American novelist (Morrison) Ross Douthat, New York Times

Alguns mitos, equívocos e objeções comuns ao capitalismo parte 2

Continuando um post antigo, seguem mais alguns mitos, equívocos e objeções comuns ao capitalismo.

Três mitos a respeito da Grande Depressão e do New Deal

Mito #1: Herbert Hoover praticava o laissez-faire, e foi sua falta de ação que levou ao colapso econômico.

Na verdade Herbert Hoover era tremendamente intervencionista na economia. Sua intervenção cooperou para o início da depressão e sua continuada intervenção evitou que a economia se recuperasse logo.

Mito #2: o New Deal trouxe fim à Grande Depressão.

Longe de ser uma série de medidas coerentes contra a depressão, o New Deal foi uma tentativa de Frank Delano Roosevelt de demonstrar que estava fazendo alguma coisa. As medidas do New Deal apenas agravaram e prolongaram a crise. Países que adotaram uma postura menos intervencionista se recuperaram da crise mais rápido do que os EUA.

Mito #3: A Segunda Guerra Mundial deu fim à Grande Depressão.

Talvez este seja o pior mito de todos: a produção industrial no contexto da Segunda Guerra gerou empregos, aumentou o PIB, e com isso acabou com a Depressão. Conforme Friedrich Hayek afirmou, “da última vez que chequei, guerras apenas destroem”. Este mito é uma aplicação da falácia da janela quebrada, observada por Frédéric Bastiat. Guerras não produzem riqueza. Na verdade elas a destroem. O exame cuidadoso dos dados históricos demonstra que a economia dos EUA só se recuperou realmente quando a Segunda Guerra Mundial já havia acabado.

Mais alguns mitos, equívocos e objeções comuns ao capitalismo:

1. Capitalismo é racista e sexista

Considerando o capitalismo economia de livre mercado, onde indivíduos são livres para escolher, nada poderia estar mais longe da verdade. O capitalismo assim definido é cego para raça ou gênero. O que importa é a troca de valores. Para ficar em apenas um exemplo, as lideranças políticas do sul dos EUA pressionavam os donos de empresas de ônibus a segregar os passageiros com base na cor da pele. Os próprios empresários de ônibus queriam ganhar dinheiro com transporte de pessoas, independente da cor da pele. Apenas uma observação: recusar serviço com base em cor de pele, gênero, orientação sexual ou qualquer outro motivo é uma prerrogativa do indivíduo dentro do capitalismo. Leve seu dinheiro para uma instituição que o receba. A instituição que recusa serviço está perdendo dinheiro, e neste sentido já recebeu a punição dentro do capitalismo.

2. Capitalismo tende a bolhas e pânico

Esta é uma observação presente tanto em Marx quanto em Keynes. Conforme observado nos mitos sobre a Grande Depressão e o New Deal, exatamente o oposto é verdade. Conforme a Escola Austríaca em geral e Friedrich Hayek de forma especial observaram, é a intervenção do governo, particularmente no setor bancário e financeiro, que produz bolhas e pânico. A tentativa do governo de estimular a economia através de juros baixos e outros artifícios apenas cria ciclos de crescimento e queda. Milton Friedman e a Escola de Chicago fizeram observações semelhantes. Deixada livre a economia é de certa forma imprevisível, mas através do sistema de preços podemos nos guiar sobre quando e no que é melhor gastar.

3. Capitalismo não investe em coisas importantes

É difícil saber o que seria um investimento importante. Somente indivíduos podem avaliar o que é importante para eles mesmos. O raciocínio aqui é que há investimentos de longo prazo, que custam muito dinheiro e não produzem resultado imediato. Capitalistas não investiriam em voos espaciais ou na cura de doenças, por exemplo. Mais uma vez observa-se a falácia da janela quebrada: investir em uma coisa significa não investir na próxima melhor opção. Exemplos recentes mostram que empresas atuando no livre mercado podem fazer mais, melhor e com menos desperdício do que governos, inclusive quando o assunto é exploração espacial.

4. Capitalismo leva a produção de coisas duvidosas

Mais uma vez este é um argumento de orientação subjetiva. Aquilo que é duvidoso para um individuo pode ser bom para outro. Há aqui a velha máxima de que “o capitalismo produz necessidades artificiais”. Conforme Voltaire respondeu a Rousseau mais de 200 anos atrás, este argumento não se sustenta. O que é uma “necessidade artificial”? Tesouras são necessidades artificiais? E sabão? E pasta de dente? Porque seres humanos viveram por séculos sem estas coisas. Conforme já foi observado por Joseph Schumpeter, a grande virtude do capitalismo é justamente trazer conforto a baixo preço não para reis e rainhas, mas para as pessoas mais simples em uma sociedade. Ainda que alguns possam considerar certos produtos de consumo duvidosos. Apenas não comprem.

Referências:

3 Myths of Capitalism (YouTube)

Top 3 Myths about the Great Depression and the New Deal (YouTube)

Common Objections to Capitalism (YouTube)

An update from Memphis (Russo-Baltic edition)

Dr Znamenski (bio, posts) sent me an email updating me on his recent shenanigans:

I also appreciate your remark that we need to reach out to other libertarian-leaning people rather than singing to only a libertarian chorus. Even though I am notorious for not contributing to NOL, I devoted this summer to reach out to liberty-minded people in Europe by going to St. Petersburg, Russia, and delivering there a public talk (in Russian) on “Heroics of the New Deal and Its Critics” at a downtown hotel and afterwards I met with the audience for a free-style interactive talk on current challenges to individual liberty. Then I proceeded to Tallinn, Estonia, where I met a group of Estonian libertarians and delivered a talk (in English) on geopolitical imagination of Russian nationalism (used current Alaska-related Russian patriotic rhetoric as an example). Then proceeded back to Russia, where at Samara University again I gave a talk on the mythology of FDR and New Deal Keynesianism and how it was appropriated in 2003-2008 by the Putin regime that was building the “vertical” of its power. My argument was that politico-economic regime whose “validity” was “scientifically” proven by Keynes in 1936 by now became a kind of a fetish that is associated with a good government. Hence, the “Heroics of the New Deal” title. The Estonian visit was especially pleasant and inspiring.

I also met an informal leader of Estonian libertarians […] Very productive and charismatic guy. I need to navigate him to you and to NOL, which will greatly benefit from his contributions (if any). His English is impeccable too. See his picture attached to this letter (they have Mises Institute of Estonia) in addition to a few other images from Estonia (the country where all paper work exists only in electronic form and a flat tax return occupies only one page!). The country [Estonia] was the first in Europe to introduce universal flat tax (1994), which replaced three tax rates on personal income and one on corporate profits. The flat tax rate was on 26%, which later was reduced to 20%. Several countries of Europe followed the suit and benefited from this. Very simple system, which helped this tiny backwater country of 1 million plus something people to dramatically raise its well-being. To their frustration, even Russian nationalists, who remain quite influential in Estonia due to the presence of a large Russian minority, have little economic discontent among Russians to chew on. The latter simply compare their economic situation in their historical homeland where average salary is $500 and Estonia where this salary is $1150.

Dr Znamenski has some excellent ideas brewing (on US-Russian relations in the Arctic, Crimean secession, and Foucault), and hopefully he can find the time to post them in the very near future. Notice, too, that Dr Znamenski refers to Russians as Europeans (or, at least, considers St Petersburg to be European). A small observation, I know, but one that I suspect has big sociological implications. Check out these pictures he sent me:

This is the Estonian libertarian Dr Znamenski mentions above. I hope to someday meet him.

This is a photo from the Museum of the 20th century in Tallinn (the capital city of Estonia).

This is my favorite picture. It’s a view of Tallinn with a curious visitor, and highlights Dr Znamenski’s sense of humor, which I greatly appreciate.

FDR, Uncle Fred, and the NRPB

In Ayn Rand’s epic novel Atlas Shrugged, government officials regulate the economy through something called the Bureau of Economic Planning and Natural Resources. She clearly chose that name to reflect their belief that productive people were bound to produce just because of their “conditioning” and could therefore be treated pretty much like coal in the ground—as resources ripe for exploitation.

One wonders whether she had ever heard of the National Resources Planning Board (NRPB). The NRPB was a real agency, part of the kaleidoscope of bureaus that formed the New Deal. Its history is in some ways as dry as dust, but a closer look reveals some interesting and timeless insights into the planning mentality and the role of personalities in shaping history.

The philosophy underlying Roosevelt’s New Deal, if one can call it that, was to try something and if it didn’t work, try something else. In that same spirit the NRPB mission changed frequently; even its name changed four times before it was killed in 1943. It had been authorized as part of the National Industrial Recovery Act, but that program was ruled unconstitutional in 1935, leaving the National Planning Board, as it was called then, in danger of extinction. It was quickly rescued by FDR, however, and established as an independent agency. Casting about for a new name, one planner suggested “natural resources,” whereupon another commented that human beings were America’s most important resource. “National Resources” was suggested. The President chewed the phrase over a few times, then, pleased with its sound, grinned and announced, “That’s it. Get that down, boys, because that’s settled.” Continue reading

Unemployment: What’s To Be Done?

In Part 1 I outlined natural unemployment, government-caused unemployment, and the attempts to measure these. We saw how ambiguous and subjective some of the concepts of unemployment are and how the government, specifically the Federal Reserve, is charged with managing it. Now we turn to current conditions and what can be done about them.

There have been huge advances in technology and substantial declines in trade barriers in recent years. While these developments have raised living standards they have been hard on people whose skills were rendered obsolete or uncompetitive. When changes evolve gradually, as when so many people left farming in the last century, the disruption is not so great. Changes are now coming faster and are extending to some high-paid professional jobs. Automated systems can now handle at least the routine aspects of some legal research and medical diagnosis.

Time and time again new doors have opened to workers as old doors closed. Machines replace workers, but they raise productivity and produce new employment opportunities. We can expect this pattern to continue for a long time to come. Still, it is within the realm of possibility that robots and computers could take over so much work that the demand for human workers would shrink drastically. But those very machines would mean higher productivity and thus higher living standards.

A great deal of work can be now be done remotely, providing an advantage to areas with low living costs. Substantial outsourcing of such jobs to foreign countries has occurred (though that trend may be reversing as low-cost areas of the United States become competitive and as customer dissatisfaction and problems with managing offshore workers come up). The benefits of outsourcing and other productivity enhancements are spread across all consumers, but the job losses are concentrated among small and sometimes vocal minorities. Continue reading

Around the Web

Matt Steinglass has a couple of great posts over at Democracy in America:

  1. Mitt Romney on Israel: Kicking the Can
  2. Mitt Romney’s Problems: Elite Defections

Paul Pillar of the National Interest picks on Romney as well

As I keep saying over and over: Mitt Romney is going to win the election. Why? Because the economy sucks. If it gets better within the next seven months, then Obama will get four more years to urinate on the rule of law and our federal republic.

K.I.S.S. Keep it simple, stupid.

And last but definitely not least, Marxist historian Gabriel Kolko sets the historical record straight on Herbert Hoover and his supposed laissez-faire policies: The New Deal Illusion. This is a must read (h/t Steve Horwitz).