The Right to Earn a Living: Economic Freedom and the Law, by Timothy Sandefur. Cato Institute, 2010. 376 pp. $25.95 (hardcover).
Parents in America typically tell their children that they can be anything they want to be when they grow up, and children tend to believe it and explore the countless possibilities.
I recall my own childhood aspirations: imagining myself as an archaeologist, wearing a khaki hat and digging in the desert sun; as a veterinarian, talking to the animals like Dr. Doolittle; as a writer, alone at my desk, fingers poised over a typewriter keyboard. Recently I found an old note in a drawer. It said, “When I grow up, I want to be a doctor. I want to save people. When I grow up, I WILL be a doctor.” Underneath my signature I had written “age 10.”
Unfortunately, in today’s America, a child cannot be whatever he wants to be. Leave aside for the time being the difficulties involved in entering a profession such as medicine. Consider the more man-on-the-street jobs through which millions of Americans seek to earn a living, support their families, and better themselves. Suppose a person wants to drive a taxi in New York City. To do so, he will first have to come up with a million dollars to buy a “medallion.”1 If he wants to create and sell flower arrangements, and lives in Louisiana, he’ll have to pass a “highly subjective, State-mandated licensing exam.”2 If he wants to sell tacos or the like from a “food truck,” and lives in Chicago, he had better keep his business away from competing restaurants, or else face a ticket and fine.3 And a child doesn’t have to wait until he’s an adult to directly experience such limitations on his freedom. Last summer, authorities in various states shut down children’s lemonade stands because they didn’t have vending permits or meet other local regulations.4
In today’s America, it is increasingly difficult to enter various professions, near impossible to enter some, and, whatever one’s profession, it is likely saddled with regulations that severely limit the ways in which one can produce and trade. Timothy Sandefur explores and explains these developments in The Right to Earn a Living: Economic Freedom and the Law.
Sandefur addresses this subject in the most comprehensive manner I’ve seen, surveying the history of economic liberty from 17th-century England through the Progressive era in America and up to the present day. He shows how the freedom to earn a living has been eroded in multiple ways throughout the legal system, from unreasonable rules, to licensing schemes, to limitations on advertising, to restrictions on contracts. In The Right to Earn a Living, we see how these and other factors combine to create a system in which it is more and more difficult to support oneself and one’s family in the manner one chooses.
Sandefur starts by establishing the historical foundations of the right to economic liberty in English common law and the Magna Carta. He writes that the Founders ratified the words “to pursue happiness” as part of the Declaration of Independence in formal recognition of this fundamental right, arguing that these words go beyond recreation or education to include the “right to take steps to provide a better life for oneself through work, trade, and commercial enterprise” (p. 3).
This historical background continues with a discussion of the evolution of the terms “corporation” and “monopoly.” Sandefur reaches back into English history and shows how the original meanings of these terms have contributed to modern confusion about the concepts and to an irrational antipathy toward businesses. Although today only the concept of monopoly identifies a coercive entity, Sandefur explains that originally both terms identified entities that had been granted favors or privileges by a monarch.
Sandefur illustrates a turning point in the government’s approach to monopolies in his discussion of the Privileges and Immunities Clause. In the period following the Civil War, southern states enacted laws that violated former slaves’ right to economic liberty—to seek employment, start a business, enter into contracts, own property, and so forth—which Sandefur calls “the right to earn a living.” Republicans of the day responded by passing the 14th Amendment, which contained the Privileges or Immunities Clause, stating: “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” The legislative history of this clause and existing case law of the time show that the phrase “privileges or immunities” was intended by the legislature to protect an individual’s right to earn a living, including the protection of those rights against state-instituted monopolies. Sandefur quotes John Bingham, the principal author of the clause, explaining that the clause included “the liberty . . . to work in an honest calling, and contribute by your toil in some sort to the support of yourself, to the support of your fellowmen, and to be secure in the enjoyment of the fruits of your toil” (p. 41).
The reader who does not know the history of the Privileges or Immunities Clause will be shocked when Sandefur explains that, a mere five years after it was ratified, the Supreme Court refused to recognize the plain meaning of the clause. The Slaughterhouse Cases concerned a law granting the Crescent City Livestock Landing and Slaughtering Company exclusive butchering rights with the city of New Orleans. Other butcher shops within the city sued and, referencing the Privileges or Immunities Clause of the 14th Amendment, argued that the law deprived them of their right to earn a living. The Supreme Court held for the state in a 5/4 decision, concluding that such economic matters did not fall under “privilege or immunity,” were not covered by the 14th Amendment, and thus were to be decided by the states rather than by the federal government (p. 42).
Sandefur details other instances of government interference in the economy, such as land grants, tariffs, and monopolies being awarded to private corporations, and he argues that these led to the Sherman Antitrust Act in 1890. Although Sherman was intended to “enforce only traditional rules against a narrow class of contracts” and not meddle with companies that “simply gained large market share by hard work and low prices,” the Act, like the Privileges or Immunities Clause, was “heavily amended” and misconstrued and is today used to prosecute companies such as Microsoft on the grounds that they are too popular and successful (p. 50).
Sandefur also illustrates the evolution of judicial interpretation of the Contracts Clause in the original Constitution, from the early days of the union to the present era. The clause, which prohibits the state from passing any law that “impair[s] the obligation of contracts,” was initially enforced by the courts. However, during the Great Depression the Supreme Court changed course, allowing a Minnesota law that changed the terms of private contracts. This decision, Sandefur asserts, “cripple[d] enforcement of the contracts clause for the rest of the century” (p. 78).
Sandefur concludes his overview of the historical changes surrounding the right to earn a living with a discussion of the controversial legal concept of substantive due process, the process by which a court protects so-called “inherent rights,” whether a protester’s “inherent right” to free speech or a woman’s “inherent right” to privacy regarding abortion. He explains the background and development of the concept and discusses how changes in its application have affected the right to earn a living.
Sandefur then discusses how the courts transitioned from using substantive due process to protect economic freedom to using the so-called “rational basis test” to deny economic freedom. With this, the courts began deferring to legislatures and allowing a law to stand where any “rational” reason could be found for passing it. This, Sandefur says, made it “meaningless and therefore futile for plaintiffs to challenge a law” (p. 128), and he shows how the test has affected modern judicial analysis of economic liberty cases, and the damage this has done. Sandefur grimly concludes that we have moved into an era in which we have different policies of judicial review for rights “assessed by the judges’ own subjective standards” (p. 135) as being either “fundamental” or “not-so-fundamental” (p. 137)—with economic freedom falling into the latter category.
As Sandefur develops the history of the right to earn a living, he includes details about the philosophies of the Progressive and Populist movements, showing how these movements affected popular opinion and entered the legislatures and courts. He discusses leading figures, such as John Dewey and Oliver Wendell Holmes, shows how they contributed to the movement away from protections of economic liberty, and provides quotes such as this 1890 gem from Woodrow Wilson: “Men are as clay in the hands of the consummate leader” (p. 47). He discusses influential modern thinkers such as Robert Bork and Cass Sunstein as well. Although Sandefur arguably could have devoted a bit more time to rounding out some of these figures, he provides a sketch of their contributions and thinking, and leaves a good jumping-off point for the reader who wants to learn more.
After thoroughly covering the history of judicial review and protection of economic rights, Sandefur moves to illustrate the contemporary assault on economic freedom. Under the heading “Protectionism and the Law” he covers government interference and favoritism in the form of occupational licensing laws, zoning regulations, and franchise acts (frequently passed by legislatures after businesses have lobbied for them). He shows how these laws work to the detriment of the average citizen—the California pest-control worker who must take a 200-question exam about pesticide use even if he does not use pesticides in his business; citizens in a small town who cannot enjoy the benefits of Wal-Mart because small businesses have successfully lobbied the government to prohibit the chain from moving into their towns; and new-car dealers in Illinois who are legally forbidden to locate their operations near existing franchises. These and other examples illustrate how such laws quash would-be businesses and raise prices for consumers.
Perhaps one of the most disquieting sections of the book deals with free speech protections under the Constitution. Sandefur explains that courts today distinguish between “commercial speech” and “expressive speech,” and only consistently protect the latter. He traces the troubling view that one is not free to express oneself through one’s occupation or work, yet again, to the Progressive era, when intellectuals of the day argued that the Founders never intended to protect advertising as speech. As a result, companies have been crippled in defending their own business practices, such as when California courts denied Nike’s freedom to defend itself against claims that it produced goods in third-world “sweatshops” (p. 196). This dual standard in speech protections has also led to extensive regulation of advertising practices, with some industries even being forced by the government to speak. We have all seen the ads that proclaim “Got Milk?” and “Beef: it’s what’s for dinner”; Sandefur reveals that businesses in the dairy and meat industries are forced to fund these campaigns (p. 208).
The next three chapters of the book read like a concise overview of a first-year law-school curricula, covering contracts, torts, and property. In “The Manipulation of Contracts,” Sandefur addresses various laws that allegedly protect vulnerable citizens from savvy businessmen, and he shows these laws to be riddled with subjectivity and detrimental to contracts.
In his chapter on torts, Sandefur highlights some of the more egregious abuses under “public nuisance” doctrine, such as suits against manufacturers of lead paint, “despite the fact that lead paint was both legal and common when the companies sold it” (p. 239). Sandefur shows that states seeking to increase their revenues and activists seeking “social change” use this vague doctrine to sue, among others, manufacturers of guns for selling dangerous products, tobacco companies for selling addictive products, and car manufacturers for selling products that pollute.
Sandefur addresses property law primarily through his analysis of eminent domain. The Constitution allows the government to take private property for public use as long as “just compensation” is provided, but Sandefur points out that this overt confiscation of private property is only a part of the problem. In the case of a “regulatory taking,” the title remains in the property owner’s hands, yet government restrictions and regulations forestall the owner from using that property as he sees fit. Sandefur explains the concepts and the case law here and provides a good overview of the state of property rights in today’s courts.
By the time the reader has made it through this material, he may be rather discouraged. With assaults on economic freedom occurring on so many fronts and throughout so many areas of law, what is an advocate of liberty to do?
Sandefur does not have a silver bullet, and it is clear from his analysis of the extent and scope of the damage that there is no such bullet. The book reveals that the assault on economic liberty is extremely broad and that no single area of the law—from constitutional theory to statutory law to contracts to torts to property law—has escaped the impact of progressivism and collectivism.
But Sandefur points out that just as this assault on economic liberty occurred slowly, so the infringements can be reversed, even if just as slowly. He emphasizes that the goal is to look forward—“It is the future that needs freedom” (p. 286). He charges today’s lawyers to litigate against progressivism, and he calls on advocates of liberty to educate their fellow citizens (p. 292). It’s not an easy solution, and it will take many people a great deal of time to make it work. But everyone who cares about a future of liberty can join in the fight. And toward understanding the breadth of the problem, The Right to Earn a Living is a good place to start.
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1 “NYC Taxi Permit is Worth $1 Million,” Columbus Dispatch, October 23, 2011, p. G4.
2 Institute for Justice, Economic Liberty, “IJ Defends Would-Be Florists from Louisiana’s Anti-Competitive Licensing Scheme, Meadows v. Odom,” http://www.ij.org/economicliberty/747.
3 Institute for Justice, IJ Clinic, “My Streets, My Eats: Let Freedom Roll,” http://www.ij.org/about/3800.
4 E. D. Kain, “The Inexplicable War on Lemonade Stands,” Forbes, August 3, 2011, available at http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplicable-war-on-lemonade-stands/.