The Constitution Constrains Rent-Seeking Without Eliminating Politics

Greg Weiner, in a characteristically thoughtful post, suggests that libertarian constitutionalism wrongly eliminates democratic politics from the polity in favor creating a republic of reason where rationality is judicially determined. While I am not a libertarian, but a classical liberal, I think that the correct reading of the U.S. Constitution does impose important constraints on the politics of rent-seeking. But it does not suppress politics so much as redirect it.

Professor Weiner correctly observes that many libertarians want to use the Constitution to prevent rent-seeking. The provision commonly referenced for this purpose is the Fourteenth Amendment. Note first, however, that the Fourteenth Amendment’s provisions apply only to the states. Thus, under a proper reading of our Constitution, the federal government may countenance rent-seeking within the scope of its enumerated powers. The difference between the strictures on states and on the nation may comport with the greater confidence that the extended republic will not be dominated by particular factions.

Moreover, at least under the appropriate reading of the Fourteenth Amendment, the restrictions on state legislation are relatively modest. The state must show that the legislation possesses a public regarding rationale and is not simply an instrument to transfer of resources or opportunity from one group to another. The great error of Williamson v. Lee Optical was that it permitted judges to make up a rationale for the legislation, and one that was not actually pleaded by the state, let alone supported by any evidence. Under the proper interpretation of the Fourteenth Amendment, legislation does not have to be perfectly rational, but it does have to some palpable basis in the public interest, such as health and safety.

In his famous dissent in the  Slaughterhouse Cases, Justice Stephen Field articulated just such a position between the Scylla of judicial abnegation and Charybdis of judicial hubris. He condemned the slaughterhouse monopoly that the Louisiana legislature granted, because it simply conferred a valuable privilege on one set of men rather than another. Yet Justice Field clearly stated that many other provisions that restricted slaughterhouses would have been constitutional:

That power undoubtedly extends to all regulations affecting the health, good order, morals, peace, and safety of society, and is exercised on a great variety of subjects, and in almost numberless ways. All sorts of restrictions and burdens are imposed under it, and, when these are not in conflict with any constitutional prohibitions or fundamental principles, they cannot be successfully assailed in a judicial tribunal. With this power of the State and its legitimate exercise I shall not differ from the majority of the court. But under the pretence of prescribing a police regulation, the State cannot be permitted to encroach upon any of the just rights of the citizen, which the Constitution intended to secure against abridgment.

Thus, under this view, the Constitution can prevent the most egregious rent-seeking and still allow for the most important part of politics—the creation of and payment for public goods as well as the regulation of externalities.

Judges will indeed have to draw the line between state legislation with a public-regarding rationale and that without such a rationale, but there is no more reason to suspect that they are not capable of drawing these lines than the lines required by many other provisions which judicial duty entrusts to their care. To say otherwise is to accept the false Progressive dichotomy between civil and economic rights.

To be sure, some libertarians argue for a more intrusive review than the Constitution permits; but our Constitution, correctly interpreted, both permits politics and constrains rent-seeking.