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The Right and US Trade Law: Invalidating the 20th Century | The Nation

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The Right and US Trade Law: Invalidating the 20th Century

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See Public Citizen's new report: "NAFTA Chapter 11: Bankrupting Democracy."

II. Rolling Back the New Deal

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William Greider
William Greider
William Greider, a prominent political journalist and author, has been a reporter for more than 35 years for newspapers...

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There’s a frightening enthusiasm for war among pundits—and now the public seems ready to go along too.

The orthodox American policy is that if challenged, the US must go to war to prove itself, to show the world it is still Superman and willing to shed blood and treasure to defend that franchise.

Political conflict over property rights has of course been central to American life since the first colonies, starting most obviously with human slavery and the brutal confiscation of Indian lands. But the property issue never really went away; it only became less visible. The conservative mind sees private ownership of property (correctly, in my view) as an essential element undergirding individual freedom. Yet conservatives typically have trouble accepting that property also regularly comes into collision with society's other values: claims for the common good, the rights of individual citizens who own little or nothing. The tension of deciding which comes first--property or people--has always generated the deepest conflicts, including the Civil War.

The last great confrontation over property rights occurred at the dawn of the twentieth century, when modern corporations emerged with national scope and scale and awesome new influence over society. A broad tide of reformers, led by labor, arose in opposition, demanding new social and economic laws to protect people and social values, but the federal judiciary blocked their way. The Supreme Court relentlessly defended business and the old order--the "classical legal doctrine" of limited government and laissez-faire economics. It spoke most defiantly in the Lochner decision of 1905, in which the Justices threw out an early New York State labor-reform law that required a ten-hour day and safer conditions for bakery workers. The law, they ruled, unconstitutionally deprived bakery owners of their property rights. Over the next three decades, the logic of Lochner was applied to invalidate more than 200 state and federal statutes--the progressive income tax, minimum-wage laws, health and safety codes, workers' right to organize independent unions and other public measures that have since become common features of US governance.

The Lochner era did not actually end until deep into the New Deal. When a liberal majority was finally achieved at the Supreme Court in 1937, it promptly upheld the National Labor Relations Act and declared that social and economic regulatory laws are constitutional after all. Government, the court affirmed, has constitutional obligations to protect society's general health and welfare, and its so-called police powers justify intrusions into the private sphere--these public necessities come before property rights. This decision opened the floodgates for expanding government and elaborating new regulatory powers in myriad ways.

In our era, conservatives think they have finally found a way to close the gates. This past March in Chicago, the Federalist Society organized a lawyers' forum with a provocative title--"Rolling Back the New Deal"--and its star attraction was Richard Epstein, law professor at the University of Chicago and intellectual lion of the right. Epstein's theory of "regulatory takings" galvanized the movement fifteen years ago when his book Takings: Private Property and the Power of Eminent Domain first appeared, describing an ingenious new constitutional interpretation designed to rein in modern government. Regulations, he argued, should be properly understood as "takings" under the Fifth Amendment ("...nor shall private property be taken for public purpose without just compensation"), so government must pay those businesses or individuals whose property value is in some way diminished by public actions.

Soon after, Ronald Reagan's Attorney General, Edwin Meese, sent a warning to every agency of the federal government, instructing civil servants to search for Epstein's "hidden takings" lurking in regulations. With financing from the usual list of conservative foundations, the Federalist Society and other groups began proselytizing lawyers and law students, even sitting federal judges, in behalf of Epstein's doctrinal counterattack on liberalism. The professor (outgoing dean at Chicago Law School) has appeared at many Federalist Society events, alternately pugnacious and ingratiating in style, with a meticulous intensity that might put less learned revolutionaries to sleep.

"It will be said that my position invalidates much of the 20th century legislation, and so it does," Epstein wrote in Takings. "But does that make the position wrong in principle?... The New Deal is inconsistent with the principles of limited government and with the constitutional provisions designed to secure that end." In telephone conversation, I asked the professor for examples and he obliged with gusto.

"Most of economic regulation is stupid.... What possible reason is there for regulating wages and hours?" Epstein said. "If my takings doctrine prevails, you have no minimum-wage laws. That's fine. You'd have an OSHA a tenth of the size. That's fine too. You'd have no antidiscrimination laws for privileged employees, which would be a godsend." Does Professor Epstein wish to restore the Lochner era of 1905? "Well, God bless, of course," he said. "But why do you think that's socially irresponsible?" In fact, he portrays his approach as moderate compromise because, unlike the Lochner doctrine, it would not invalidate the regulatory laws that legislatures enact. He would merely make the public pay for them. "We will allow the majority to have its way so long as it's willing to buy off its dissenters at a fair valuation," Epstein told the libertarian magazine Reason.

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