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The Upside-Down Constitution: A (Diffident) Reply to Mike Rappaport

Heartfelt thanks to Mike Rappaport for his generous and thoughtful posts on The Upside-Down Constitution [“UDC”]. Herewith a two-part reply to two points Mike rightly identifies as crucial: interstate commerce (today’s post), and federal spending (tomorrow’s).

Commerce

Michael R. writes:

While modern federalist/originalists have argued for Congress to protect the competitive [federal] structure – for example, by using the positive Commerce Clause – Michael argues that the Supreme Court is needed and should use the dormant Commerce Clause. While Michael makes some good points here, it is not clear to me that the Supreme Court will always or even generally get things right. But maybe it will, especially if scholars like Michael draw a map for the Court explaining where it needs to go.

Fair enough. Here’s how I look at it:

A competitive federal structure depends on (among other things) free internal trade, conducted on terms of non-discrimination and non-aggression (such as exploitative, “extraterritorial”taxation). Plainly, Congress may use the (affirmative) commerce power to those ends. But it hasn’t done so often, at any time in American history. In 99 cases out of 100, Congress either sits on its duff or else, destroys state competition under the heading of “regulating commerce.” To urge Congress to mend its ways is to howl at the moon. Interstate commerce that depends on Congress to make it free is already dead or at least, condemned to the miserable fate of a regulated utility. The New Dealers understood this, which is why they preached judicial deference to Congress.

UDC argues that the Founders also understood this, long before the New Dealers. Their Constitution reflects a clear recognition that free internal trade is way too important to be left to the dilatory, faction-ridden Congress. The Constitution teems with pro-competitive free-trade rules: the Import-Export Clause, the Tonnage Clause, the Compact Clause, the Contract Clause, the Privileges and Immunities Clause. Overwhelmingly, these provisions do not create federal powers: even under a restrictive understanding of the commerce power, Congress could prohibit the constitutionally enjoined state practices. But you don’t want to run the risk—actually, the near-certainty—that it will fail to do so. Thus, the point of the constitutional arrangement is to establish a pro-competitive baseline and to shift primary enforcement authority to the federal courts.

The central recognition is that judicial authority, unlike legislative authority, can cut only in a pro-competitive direction. Unlike Congress, federal courts can’t make commerce “regular” by making side payments, or by “harmonizing” minimum standards for the states; or by running entire industries as public utilities. All they can do is mow down state impositions on commerce; and the removal of those impediments is the regulation and the competitive baseline. In that important sense, the courts don’t need a map. The only way they can gum up the works is by failing to enforce the rules of the game.

The institutional logic is sufficiently deep to dominate all federal systems. All such systems must produce economic (as well as political) integration. That can be done on “negative” terms: don’t discriminate against out-of-staters; don’t tax anyone except your own citizens; etc. That’s what courts do—not just the Supreme Court (during the 19th century) but also the modern-day European Court of Justice. The ECJ has never had a justice with a pro-competitive bone in his body. Still, on account of the institutional logic, so long as the ECJ was in charge of European integration, it proceeded on Margaret Thatcher’s terms: free trade, and clear sailing all across Europe for the City of London. Alternatively, integration can proceed on “positive” terms, supplied by legislatures. That’s what Lady Thatcher called “harmonization through the back Delors”: we the politicians tell you the people in the various states on what terms you may conduct your business across borders. Yikes.

Two complications. First, the reasoning just sketched doesn’t quite answer the question of the “dormant”Commerce Clause—that is, the notion that the power of Congress to regulate commerce among the states entails a judicial power to enjoin states from regulating that same commerce (even when Congress hasn’t said a peep to that effect). While the Supreme Court has enforced the dormant Commerce Clause (in various permutations) throughout our history, it’s perfectly coherent to argue—on originalist or other grounds—that the specific pro-competitive provisions of the Constitution exhaust the universe of judicially enforceable prohibitions against anti-competitive state practices (exclusio unius, and all that). UDC argues that this reasoning is mistaken. But that’s a long and complicated argument.

Second, Mike Rappaport’s question whether the federal courts will get the competitive rules right applies with full force in areas where you need affirmative ordering rules for interstate commerce, as distinct from mere non-discrimination rules. Erie Railroad, of course, says that federal courts mustn’t supply such “general” common law rules. But they do, in certain enclaves such as maritime law and cases involving federal institutions; and when they do, they usually seem to get the rules right, or at least righter than Congress or states would get them. (Carnival Cruise Lines, Clearfield Trust, and  United Technologies v. Boyle are the classic illustrations. Modern antitrust law, which is completely made up by courts, is another example.) Assuming that is so: why is it so? My hunch is that the federal courts are more likely than Congress or individual states to recognize the inherent reciprocity of interstate (commercial) relations: more “rights” for (citizens of) one state may easily mean fewer rights for (citizens of) another. But that, too, is a long and complicated argument.

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