Federal Courts, Commerce, and Regulation
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
– The Wealth of Nations, Book I, Chapter X.
Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations is skeptical of merchants and manufacturers who often turn to government for protection from domestic and foreign competition. At the same time Smith praises productivity gains from investment and manufacturing innovation. Exchange economies advance worker skills, often raising wages as lower-cost goods and services are delivered to consumers.
Capital from investment supports innovation, developing ever more sophisticated technologies that boost labor productivity and wages. It is easy though to take advances for granted.
Consider the chart below showing the gains American workers have enjoyed since the late 1800s. Work has been reduced from 10 hours a day and 61 hours a week in 1870 to 7.3 hour days and 34.5 hour work weeks by 1990. Holidays and average vacation days have expanded from a 3 to 22.
These are the Good Old Days (pdf) looks at eye-opening progress over the last century, reflected in the numbers above. Many more measures of progress are illustrated in the Dallas Federal Reserve publication. Through the twenty years from 1970 to 1990, advances can be measured:
• New homes on average expanded from 1,500 square feet in 1970 to 2,080 in 1990 (and by 2015 average over 2,500).
• The average workweek dropped from 37 hours in 1970 to 34.5 in 1990.
• Average paid vacation and holidays rose from 15.5 in 1970 to 22.5 in 1990. (Slower average wage gains since the 1970s has been due in part to higher benefits and vacation time.)
All these advances are welcome, but layers of state and federal regulations of economic activity has slowed progress and prosperity, and contributed to income inequality.
Stepping back, the protections for economic liberties thought to be in the 14th Amendment, were reduced by an earlier Supreme Court interpretation of the amendment in the Slaughterhouse Cases. Legal Scholar Randy Barnett discusses in this October, 2015 CSPAN video: U.S. Supreme Court 1873 Slaughterhouse Cases (the video has some glitches).
The “privileges and immunities” clause of the 14th Amendment might seem to protect people wishing to charge other people to transport them from place to place (Uber and Lyft), or protect the right of someone to bake a cake or pie at home and then sell it to someone. However, the current federal court system defers to state and federal legislators and regulators in restricting virtually all economic activity.
[More to follow…]