Court has role in economy

By Richard Epstein

Los Angeles Times

The Supreme Court has not been much of an issue in this year’s election. When it has come up, voters have typically focused their concerns on two issues, abortion and affirmative action. In my view, those issues receive too much attention. Both command broad political support that would dampen any Supreme Court efforts to stop them in their tracks. Still, we should all be concerned about how the court will be shaped by the next president, and how it will respond to the wide array of economic issues it must decide.

Today, the country is mired in a prolonged economic slump that has slowed growth to a crawl, reduced median family income and produced record increases in entitlement programs. Most people think responsibility for this impasse rests primarily with the political branches of government at both the state and federal levels. But that assessment overlooks the Supreme Court’s role in facilitating the current malaise.

One reason the court gets little attention for its economic views is that the cases that bring them into focus aren’t ones that divide cleanly along liberal or conservative lines. In an earlier era, however, the court had deep divisions about the constitutionality of virtually every major social and economic initiative, and the impact of cases decided in the first half of the 20th century is still being felt.

Federal agricultural price supports, for example, were sustained by New Deal justices in Wickard v. Filburn in 1942, and that decision became one of the pillars in this year’s opinion on the Patient Protection and Affordable Care Act (a.k.a. Obamacare).

Unlawful takings

Rent control and zoning laws were sustained in two 1920s Supreme Court decisions against the claim that they were unlawful takings of private property, and those rulings continue to be cited to this day as justification for denying rights to property owners.

The National Labor Relations Act and the Fair Labor Standards Act also weathered constitutional challenges in the 1930s, and the ramifications of those decisions still affect such things as minimum-wage laws and overtime pay.

A common thread runs though this unbroken line of Supreme Court cases. Each rests on decisions arrived at through the “rational basis” test. This method of evaluating the constitutionality of a law holds that the wisdom of economic regulation is left to Congress as long as the statute can remotely be construed as the means to a legitimate federal goal. That low standard has allowed numerous poorly conceived laws to stand, even though they disrupt the operation of competitive markets and exact a heavy economic toll.

Unfortunately, today’s left-right political coalition has allowed for the endless expansion of programs that divert public funds from productive activities to wasteful ones, including such recent chestnuts as ethanol support. The recent fixation with failed stimulus programs and vanishingly low interest rates diverts attention from the massive structural changes needed throughout the economy. Unless faulty economic policies that have received Supreme Court blessing are scaled back, the economic bad times will continue apace, no matter what our monetary and fiscal policy.

These are among the issues that need to be revisited and rethought by the Supreme Court. They should be at the center of vetting potential court nominees.

Mitt Romney seems to actually understand enough about the economic situation to restore these questions to the constitutional agenda. In addition, new justices with a solid appreciation of these matters could influence the votes of other justices on the many economic and tax issues that come before the court today on its regular docket.

Richard Epstein is a professor at NYU Law School, a senior fellow at the Hoover Institution and a senior lecturer at the University of Chicago Law School. He wrote this for the Los Angeles Times. Distributed by McClatchy-Tribune Information Services.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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