The Gresham’s Law of Law

In economics, Gresham’s Law is the law that say “bad money drives out good money.” In law, there is a similar law – deviant or problematic lawmaking drives out orthodox or legitimate lawmaking. This occurs in both constitutional law and administrative law.

Let’s start with constitutional law. The law of the Constitution is supposed to be established through the constitutional enactment process and the constitutional amendment process. Yet, it is well known that the Supreme Court does not always follow this legitimate method of constitutional law making, and instead changes or updates the Constitution through judicial lawmaking.

It is sometimes thought that these two types of lawmaking can coexist, but it has become increasingly clear that this is not the case. Since the New Deal, and especially as the Court has engaged in more judicial updating, the constitutional amendment process has atrophied. The main reason is that a constitutional amendment can only pass if it is supported by a consensus of the country. And developing a consensus may take a long time and may require compromise.

But if five members of the Supreme Court feel free to update the Constitution anytime they believe there is something wrong with it, then the consensus necessary for a constitutional amendment may never develop. The Court will act before the time necessary to form the consensus. And the five members may not have to compromise, instead getting the result they desire. Moreover, once the Court acts, there is no opportunity for a consensus to develop since a significant portion of the public will have already gotten what they want.

So illegitimate constitutional lawmaking (judicial updating) will displace legitimate constitutional lawmaking (constitutional amendments).

Now consider administrative law. The Congress generally delegates the power to enact regulations to administrative agencies. As a result, most rules at the federal level that govern the public are passed by administrative agencies rather than by Congress. Put differently, most federal law – at least regulatory law – is enacted by administrative agencies rather than by Congress.

But why does this occur? There are many reasons but one of them is the difficulty of Congress passing new laws on its own. We usually live in a world of divided government and the two parties cannot agree on passing laws.  Therefore, it is necessary for the agencies to promulgate regulations on their own, without requiring the consent of the Congress.

Yet, it is not clear that this analysis is correct. Instead, the problem may be that Congress has delegated power to administrative agencies. If Congress were prohibited from delegating legislative power to agencies, then the agencies could not act on their own. That would put pressure on Congress to compromise in order to pass needed regulations.

At present, no such compromises occur. Instead, the President’s party to a significant extent gets the regulations it desires out of the agencies. And therefore the President and his party are unwilling to compromise in passing new regulations.

Once again, the existence of problematic lawmaking (delegated lawmaking) operates to drive out orthodox lawmaking (statutes by Congress).

There are other areas where this same problem occurs (such as the initiation of military hostilities).  But the basic point remains. Deviant lawmaking displaces legitimate lawmaking. You cannot have it both ways. Just as bad money is a sign of corruption that undermines the currency, so deviant lawmaking is a sign of corruption that undermines legitimate lawmaking.