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Economic Liberty–Part of the Constitution’s DNA

Previously I praised America’s Unwritten Constitution by Akhil Amar and then offered my first reservation about the book. My second reservation is its treatment of economic liberty. Professor Amar sees the greatness of the Constitution in the unfolding of democracy and equality. But economic liberty is also in the Constitution’s DNA and yet he seems to leave it out of the American story.

I also thought unfounded one historical claim, which itself surprising, because Professor Amar is generally very reliable. In a discussion that attacked theories of interpretation that would justify reasoning striking down economic regulation, as in Lochner v. New York, he wrote: “The 1913 ratification of Federal Income Tax Amendment, one of the most notable populist events of the twentieth century, blessed redistributive economic policy by endorsing a tax that everyone understood would likely feature a progressive structure taxing the wealthy at steeper rates than the poor.” One does not have be a libertarian to wonder whether the proposition that this amendment blessed redistributive economic policy in general is an overstatement. In fact, the 16th amendment can be seen as attempt to find an stable source of revenue other than tariffs, which were not only inefficient but often regressive, rather than a general endorsement of redistribution.

In any event, regulatory powers and taxing powers are different constitutional concepts. Economists then and now almost universally see redistribution through taxation as a superior policy, because it does not lead to as much distortion and loss of innovation as does redistribution through regulation. Thus, the 16th amendment cannot be said to extinguish whatever constitutional restrictions there are on redistribution through regulation.

More generally, our Constitution protects economic freedom in many ways. The Constitution of 1789 most notably contained the Contract Clause, which prevents the states from “impairing the obligation of contracts.” It shows that protection of that economic liberty was so important as to be one of the relatively few restrictions the Framers imposed on the states. It was the most litigated provision of the Constitution in the nineteenth century. In the twentieth century, the Supreme Court gutted the Clause. It should be revived.

Beyond this specific right, the Constitution of 1789 also protects economic freedom structurally. It encourages a national trade zone among states, protects economic freedom in states through exit rights, and through bicameralism and presentment impedes legislation by the federal government from which exit is far less easy. And the Privileges and Immunities Clause of the Fourteenth Amendment correctly interpreted probably does protect some rights to pursue work.

I am far from thinking that classical liberalism is the single skeleton key to unlock the meaning of the provisions of the Constitution, as Richard Epstein believes. But the Constitution has a mixture of objectives that includes the protection of economic freedom. And that protection is part of the American story that separates us from Europe with its feudal inheritance no less than does our does our expansion of representation and equal legal rights. Of course, Professor Amar is hardly alone in failing to discover the correct constitutional balance between economic rights and the rights to self-governance. It  continues to elude even our most brilliant constitutional theorists.

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