We Need More Guns on the Ground

Richard Epstein*

Richard Epstein

Richard Epstein

The mass shooting in San Bernardino by the young Muslim couple Syed Rizwan Farook and Tashfeen Malik, now clearly identified as middle-class ISIS terrorists, has created a vast sense of unease in the United States. Everyone agrees that their heinous conduct was horribly wrong. But the consensus ends there. Come to the next question, and there is hopeless disarray on the appropriate collective and individual responses to the looming threat of terrorist acts. It is best to tackle the widespread and diffuse threat of the use of deadly force head-on.

This issue is, of course, not just a domestic one. It is also a question of foreign affairs. The more the United States and its Western allies dither over using ground troops against ISIS, the more mass slaughter and mayhem is committed in the territories under ISIS control. One recent tally has ISIS as having already killed 170,000 just in Iraq. This is a major reason why the refugee flow in Germany alone is expected to reach 1.3 million by year’s end.

None of this carnage has moved the United States and its Western allies to action on the ground. But the killings, first in Paris and now in San Bernardino, have shown that there is no way to wish ISIS away as some distant Middle-Eastern problem. It is now a domestic problem that requires both a global and national response.

Today, an effective Middle East military response is not just a humanitarian imperative; it is also an integral part of our own strategy of national defense. Operating from its secure base will allow ISIS to create, by words and deeds, a trail of death in the United States and elsewhere. The quicker one cuts off the ISIS head—an all-too appropriate metaphor—the easier it will be to attack its appendages in the United States and the rest of the Western world. 

Yet in his recent speech on ISIS and the San Bernardino tragedy, the President once again categorically ruled out the use of any sustained ground troops overseas, insisting that he will not put American soldiers in harm’s way for a decade in the effort to take out ISIS.  And so the wound is allowed to fester indefinitely by a President who fails to acknowledge the success of the surgeagainst far greater obstacles. In the larger sense, nothing else he says or does can compensate for the horrendous losses attributable to this delay.

The President’s indefinite timetable, of course, makes it ever more imperative, and ever more difficult, to counter the terrorist threat at home. Yet on this issue, it is distressing to see just how far off base the responses from commentators are. For instance, there have been some senseless broad-based attacks on Muslim citizens who are every bit as appalled, if not more so, at the violence committed in their religion’s name. A successful counterterrorist strategy will enlist their support, for they are in the best position to slow down the ISIS recruitment rate and to provide information to public authorities about secret weapon stashes and terrorist cells. It doesn’t help that some Muslim leaders want to place part of the blame on an extremist American foreign policy, as if the slaughter of Muslims by Muslims should be laid at the doorstep of the West. Good relations are very much a two-way street.

Then there’s the matter of gun control. No matter what the state of play is on the ground, gun control advocates around the country think the solution to mass shootings is tougher restrictions on gun access. President Obama leads the charge when he plumps “for common-sense gun safety laws, stronger background checks,” and insists that an effective countermeasure against terror is prohibiting people on no-fly lists from buying guns.

Worse still, many gun control advocates pillory anyone who disagrees with them with invective that it is hard to sort out. Perhaps the most visible attack came from U.S. Senator Chris Murphy, who right after the shooting directed his venom not toward the killers, but to the Republican Party: “Your ‘thoughts’ should be to take steps to stop this carnage. Your ‘prayers’ should be for forgiveness if you do nothing again.” But do what? According to a New York Times front-page editorial, we should not “abet would-be killers by creating gun markets for them.” And further: “It is past time to stop talking about halting the spread of firearms, and instead to reduce their number drastically.”

Dream on. Moral indignation is never in short supply during such crises, but what is needed is some assurance that the means selected will achieve the desired end. In this case, an inexcusable combination of boorishness and ignorance pushes matters in the wrong direction. The boorishness of people like Senator Murphy undermines the social solidarity needed to boost morale and allow a nation to meet the perils at hand. When people say their thoughts and prayers are with others, they are making a small but vital gesture that tells people who have lost loved ones that they are not alone. To mock that behavior is just a thinly veiled way to attack those who are opposed to new forms of gun control.

Worse still, this level of moral superiority comes from the same people who never once try to meet the substantive arguments against them. Start with the simplest fact that the number of guns in the United States has risen over the past 20 or so years, while at the same time the crime rate has been cut in half. The causes for the drop are doubtless multiple, but at least one factor in the mix is that the wider ownership of guns has changed the ratio of guns in the hands of good and bad people. “More guns, less crime” is no moral incantation, but there are good theoretical reasons why the claim cannot be dismissed with contempt. The prospect that force will be met with force reduces the gains from violence, and thus should thereby reduce the frequency of gun deaths.

The size of this effect is hard to measure, but other arguments against gun control reinforce the basic conclusion. A recent catalogue of the objections to gun control laws was forcibly advanced by Chicago Tribune columnist Steve Chapman, who notes that California’s tough gun laws did nothing to stop Farook and Malik, who also were not on any no-fly list. Sadly, no scheme, however elaborate, can prevent guns from falling into the hands of the wrong people—see France. The Wall Street Journal ran asimilar article noting how easy it is to convert legal weapons with limited capacity into automatic weapons that are far more deadly.

But even if gun control had a 100 percent effectiveness rate of stopping these kinds of shootings, the risk of terrorist attacks, both local and global, remains. Palestinians use knife attacks with deadly effect against Israelis. People can also be killed with blunt instruments or by strangulation and arson. Worse still, guns are not the most efficient weapons to use for mass killings. It was a truck-bomb explosion outside the Alfred P. Murrah federal building in Oklahoma City that left 168 people dead and injured 680 more in 1995. It was jet planes that killed thousands on 9/11. And if Farook and Malik had even modest competence in manufacturing their pipe bombs and other explosives, the toll of death and injuries in San Bernardino would have been much higher. The sad truth is that any set of strict gun control laws at either the federal or state level are likely to divert resources that are better spent elsewhere, while doing nothing to reduce the death toll from terrorist attacks, which might well increase. It is not enough to do something. It is critical to do something effective.

And it is here that the story turns back to Iraq. In both Iraq and the United States, a comprehensive strategy against terrorism must involve the use of greater force on the ground. But sending troops to California is not the answer. Ramping up protection at home is. Some portion of that burden will of course fall on our armed police forces. But the key element in this battle could well be a transformation in the attitude toward concealed weapons. In Israel, it is common practice for off-duty police and military personnel to carry concealed handguns or other weapons. The same approach should be adopted in the United States for it is the only remedy that is likely to provide a credible first response to a terrorist attack.

The great weakness of gun control laws is that they try to attack the problem at a time and place far in advance of any actual attack. The precautions that are used apply to lawful and dangerous gun users alike. No matter what the checks, it is all too easy for the bad apples to escape detection. The tragedy is that later on, at the point of the actual attack, it is easy to identify the killers, but a defenseless crowd is unable to do anything but flee in response. But put even one random person with a gun in the room, and now the attackers face immediate resistance long before the police arrive in force. Because the weapons won’t be in the hands of rank amateurs, it is highly unlikely that the off-duty officers or military personnel will compound the problem by foolish actions. Stopping or slowing down an attack by taking out an assailant could save many lives.

In addition, guns in defense are not only good against assailants with guns; they can also take out attackers who are using explosives or grenades. It is therefore harder for terrorists or criminals to switch weapons in order to escape resistance. Indeed, the prospect that there may be someone on site who can actually fight back should serve as a deterrent against random terrorist attacks to begin with. The bigger the terrorist target, the larger the number of armed officers should be. Since, moreover, no single central authority will know the exact location of the police and military officials carrying concealed weapons, it becomes far more difficult for terrorists or suicidal maniacs to develop plans to avoid confrontation in the first place. The actual cost to the public budget is low, and the probable effectiveness is greater than that of any alternative strategy.

It is no coincidence that those who will recoil against this proposal are the same people who think that the U.S. and its allies should avoid boots on the ground in Iraq. Their timidity in the face of armed mayhem compounds the risks our nation faces. Our misguided gun control champions have to do more than insist that we should try some new gun-control gimmick to make things better. They have to come forward with some concrete plan that works not only in some idealized universe, but in the evermore dangerous environment that we face at home. If we do not arm off-duty officers, San Bernardino could easily become the opening chapter in an ever-lengthening tragedy. In this battle, force must be met with force; better background checks just won’t cut it.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Obama’s Disastrous Iran Deal

Richard Epstein*

Richard Epstein

Richard Epstein

In his famous 1897 essay, “The Path of the Law,” Oliver Wendell Holmes said that to understand the law, it would be necessary to adopt the perspective of the famous “bad man,” the one “who cares only for the material consequences” of his actions, but “does not care two straws for the axioms or deductions” of natural law. Our bad man just wants “to know what the Massachusetts or English courts are likely to do in fact.”

Today, Holmes’s quintessential bad man is Iran, as it only cares about what happens if it gets caught,—caught, in this case, developing nuclear weapons. With most contracts, people work overtime to avoid that problem by choosing the right business partners. But there is no such luxury in international affairs.

Last week, Iran and the six world powers—the United States, China, Russia, Great Britain, France, and Germany—plus the European Union signed a nuclear deal called the “Joint Comprehensive Plan of Action.” Any examination of this deal has to start with the ugly but accurate assumption that Iran will, at every opportunity, act in bad faith.

The agreement starts off on a grand note: “The goal for these negotiations is to reach a mutually-agreed long-term comprehensive solution that would ensure Iranˈs nuclear program will be exclusively peaceful. Iran reaffirms that under no circumstances will Iran ever seek or develop any nuclear weapons.” But it is straight downhill from there.

The first problem with the deal is that it gives Iran an undeserved respectability that comes simply from being allowed to sign a significant international agreement.

Worse still, China and Russia should not be understood as adverse to Iran, their present and future ally. They are better understood as a Fifth Column against the West, and Iran’s many other foes, whose role in the negotiations is akin to the role that Vladimir Putin played in the embarrassing negotiations over chemical weapons in Syria that all but destroyed Obama’s credibility in foreign policy. Putin will be happy to take any excess uranium ore off the hands of the Iranians. But at the most opportune time, he might be prepared to return it to Iran if doing so would benefit Russia. The Chinese, for their part, also sense weakness in the United States and the West, as they build up illegal islands in the South China Sea subject to our diplomatic objections that accomplish nothing.

The remaining parties are our nominal allies who must believe that this nuclear deal represents a retreat from the basic proposition of Pax Americana—the guarantee that the U.S. will provide meaningful guarantees for the security of its allies. Our allies may well become less hostile to Russia and China precisely because they cannot count on U.S. leadership in tough times. The situation is starker still for the Israelis, who fear that the deal will embolden the Iranians to create more mischief in the Middle East and elsewhere. The Saudis are probably next in line in this belief. And both are surely right.

Iran’s promises count for nothing. Iran is quite happy to fund Bashar al-Assad in Syria, to back Hamas, and to launch terrorist attacks throughout the Middle East. It is eager to confront its Sunni rivals, most notably Saudi Arabia, by supporting their enemies. It is eager to annihilate Israel. Indeed now that the agreement seems in place, the Ayatollah says flat out that deal or no deal, “we will never stop supporting our friends in the region and the people of Palestine, Yemen, Syria, Iraq, Bahrain and Lebanon.”

Why then would anyone be surprised that Iran would be willing to make high-sounding promises that it has every intention to quickly break? Does anyone really agree with the President’s rosy view that Iran will reciprocate our respect with its respect? Putting our best foot forward makes sense with ordinary business deals where reputations count. It makes no sense when dealing with a Holmesian bad man who has no need or intention of reciprocating good will with good will.

In this sort of negotiating environment, reviewing the counterparty’s track record is a must, and Iran’s is far from laudable. Hence the guts of this deal lie not in lofty preambles, but in its gritty details of enforcement and sanctions, two issues which should be non-negotiable—a word that President Obama never invokes to defend our position.

One issue concerns the sequence in which the various stipulations of the agreement go into play. The black mark against this agreement is that it virtually guarantees immediate removal of the full set of economic sanctions against Iran, which will lead to an infusion of cash, perhaps in excess of $150 billion, into the country, some fraction of which will promptly flow to affiliate groups that cause mayhem around the world. But what does the President say about this substantial negative? Nothing. He just ignores it.

In his much-ballyhooed interview with Thomas Friedman of the New York Times, he stated: “Don’t judge me on whether this deal transforms Iran, ends Iran’s aggressive behavior toward some of its Arab neighbors or leads to détente between Shiites and Sunnis. Judge me on one thing: Does this deal prevent Iran from breaking out with a nuclear weapon for the next 10 years and is that a better outcome for America, Israel and our Arab allies than any other alternative on the table?”

In fact, we should judge President Obama and his treaty harshly on each of these points. By providing Iran with billions of dollars of immediate cash, this agreement will help Iran fund wars and terrorist attacks that could take thousands of lives. To offset this possibility, the President has indicated that he will try to bolster American assistance to the various countries that will be affected by Iranian aggression, but none of our allies can have much confidence in the leadership of a President who has made at best negligible progress in dealing with ISIS. His public vow to never put American ground forces in the Middle East turns out to be the only promise that he is determined to keep—for the benefit of our sworn enemies who have greater freedom of action given his iron clad guarantee. The objection to the President here is not that he has merely failed to curb Iranian mischief. It is that his clumsy deal will massively subsidize it.

Second, there is no more “snap back” here. Once the sanctions set out explicitly in the agreement are lifted from Iran, they won’t be reinstated any time soon. Gone are the days of anytime, anywhere inspections. In stark contrast, Articles 36 and 37 of the agreement outline a tortuous review process to reinstate any sanctions. First the Joint Commission must act, then the Ministers of Foreign Affairs, and then a nonbinding opinion by a three-member Advisory Board must be issued. If the matter is not resolved to mutual satisfaction after this process runs its course, any participant “could treat the unresolved issue as grounds to cease performing its commitments under this ICPOA.”

Section 37 then contains a murky provision under which the UN Security Council might possibly reimpose sanctions in part. But the entire procedure could take months, and at the end of this process Iran is free to walk if it does not like the outcome. Iran would also know that reassembling the original set of sanctions would be extremely difficult. Putting this agreement in place will likely end collective sanctions irreversibly.

And what do we get in exchange for all of the added risks we assume? The President claims that we have secured the best path possible to slow down the ability of the Iranians to make a nuclear weapon for at least ten years. But why should anyone believe that that will be the result when we are dealing with the quintessential bad man? The only safe way to slow down Iran’s nuclear capabilities is to do what the President claimed was necessary earlier, which is to knock out Iran’s total production of enriched uranium, subject to constant supervision.

It is all too clear that what Obama has offered today is a far cry from the deal he outlined to the country before these negotiations. It was easy for the President to talk tough to Mitt Romney in the course of their 2012 debates by then claiming it was “straightforward” that Iran has to “give up” its nuclear program in its entirety. As the President once recognized, there are no peaceful ends for which Iran needs a nuclear program. It is awash in oil, and it can satisfy any desire for medical isotopes by buying off-the-shelf products from any of a dozen nations that would be thrilled to supply them for free.

The agreement dramatically changes Iran’s status as an international aggressor. Elliott Abrams gives us the grim tally. Right off the bat, Iran’s nuclear program has gone from illegal to legal. The new agreement lets Iran keep 6,000 centrifuges and it allows the country to continue to do its own weapons research. It is likely that it can do a lot more outside the agreement as well. In five years the agreement lifts an arms embargo and in eight years all restrictions on ballistic missiles will be lifted.

It is often said that negotiation involves the process of give and take, by which it is not meant that the United States and its allies give and Iran takes. Unfortunately, that pattern has been observed in this recent deal. Iran had no hesitation in stating in the eleventh hour that various limitations on its sovereignty, e.g. inspections, were “unacceptable.” Today its position is that the sanctions must be lifted immediately. But the Obama administration was extraordinary reluctant to say that any Iranian proposal was unacceptable. The drama in the negotiation was how far the Iranians would push the agreement to their side of the table—which is exactly what to expect from any negotiation that relies exclusively on carrots and disdains all sticks.

This agreement does not require detailed study to conclude that it is a dead loser. Nonetheless, the United States has put it forward in the United Nations for approval before Congress has spoken, and the President, incorrigible as ever, has announced that he will veto any Congressional legislation that seeks to block the treaty. Many members of his own party do not share the President’s unfailing instinct for self-destruction. They should join the Republicans to reject the treaty by veto-proof majorities in both houses before the President and his team can do any further harm. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

The Folly of "Fair" Housing

Richard Epstein*

Richard Epstein

Richard Epstein

This past week, the Department of Housing and Urban Development (HUD) issued a long and convoluted final rule, entitled “Affirmatively Furthering Fair Housing” (Final Rule). This rule sets out the new terms and conditions which all local governments will be required to meet if they receive federal funds to advance their local housing programs.

These obligations are not made out of whole cloth, but were explicitly set out in the Fair Housing Act of 1968 (FHA), which has two separate parts. The first is a general command prohibiting all private parties from “discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions because of race, color, religion, sex, familial status, national origin, or handicap.”

The second, which applies to government agencies that receive public funds, imposes the additional obligation that they take proactive steps (which the new rule rebrands as “meaningful actions”) to eliminate “historic patterns of segregation, achieve truly balanced and integrated living patterns, promote fair housing choice, and foster inclusive communities that are free from discrimination.”

The tedious Final Rule, which has been hailed as “historic and overdue,” is an intellectual shipwreck. Its empty and vacuous commands are incapable of rational implementation. Yet notwithstanding HUD’s pious denials, the department is sure to continue its history of contentious litigation brought to chastise and correct local governments whose actions have not met its standard. One inherent difficulty in both the previous and current versions of the Final Rule is that its objectives are often in deep conflict with one anther.

HUD gives backhanded recognition to this point when it notes: “The Fair Housing Act does not prohibit individuals from choosing where they wish to live, but it does prohibit policies and actions by covered entities and individuals that deny choice or access to housing or opportunity through the segregation of persons protected by the Fair Housing Act.” But it does not grasp the magnitude of this concession. It turns out, of course, that most individuals do not wish to live in communities that meet HUD’s sterile definitions of "truly balanced and integrated communities.” They often prefer to live with individuals with whom they share common value in neighborhoods that offer the social support and companionship that they so clearly want.

It is not that everyone wants to live in racially homogenous communities. Quite the opposite. Edward Glaeser and Jacob Vigdor offer substantial evidence that racial separation has declined over the past 50 years, largely if not wholly apart from HUD’s affirmative action interventions. HUD offers no evidence of the potency of its affirmative action program in its Final Rule. But so long as some preferences for living with like individuals persist, there is little doubt that people will tend to cluster in communities with people of the same race, ethnicity or economic class, which tends to facilitate the kinds of interactions that they want. It is still important to recall Thomas Schelling’s seminal 1969 study, “Models of Segregation,” which shows how extensive racial separation can take place even when most people of both racial groups prefer to live in neighborhoods which are integrated, but in which they prefer to constitute a majority.

HUD is willfully blind to these complications. No matter how many terminological changes HUD makes in its report, it does not deal candidly with the serious risk that voluntary choices by ordinary individuals will undo the scripted program that HUD wants to impose on neighborhoods and communities. Indeed, even if by some magic stroke, the construction of new projects could result in “truly balanced and integrated living patterns” at time one, it is highly unlikely that those patterns will persist as individual choices will continue to undermine HUD’s desired end-state regimes.

The point here is an old one in political theory. In his famous book Anarchy, State, and Utopia, libertarian philosopher Robert Nozick pointed out that “patterned principles,” of the sort that HUD wants to impose, cannot survive in a world where individuals are entitled to acquire and exchange property with each other for mutual advantage. The logic of his historical theory of justice is that each voluntary exchange produces gains for the parties to it, and then sets the stage for further transactions with the same effect. The net result is a set of unpredictable outcomes whose process helps assure that the results will be socially desirable.

In similar fashion, Friedrich Hayek has long warned of the fatal conceit of central planning, which stems from the simple observation that government edicts are only the first step in a complex interactive process. When, as with HUD, these edicts work at cross purposes with the desires of local communities and their individual residents, the grand plan will surely be subverted by the responsive actions taken everywhere down the line. The HUD Final Rule concludes that its diktats and datasets will provide local communities the needed aid in formulating their new plans. But the guidelines are so squishy that HUD could favor local governments it likes while making life difficult for those that it does not. Nothing in the report indicates what safeguards if any will be put in place to prevent partisan sentiments from taking hold.

One way in which it is possible to gauge the inherent difficulty is to look at some past litigation that HUD has initiated from its grantees. One case of special note involves the prolonged litigation in New York State in United States ex rel. Antidiscrimination Center v. Westchester County, which settled in 2009. Over a six-year period, Westchester had received about $52 million in federal funds, which were subject to these same basic statutory obligations.

A private community group challenged Westchester’s plan under the federal False Claims Act for not meeting its HUD obligations. In a bruising opinion by Judge Cote, the County was called out for not meeting those obligations because it chose to construct more affordable housing, even though its choice of housing projects were said to increase segregation. The ultimate settlement required the County to spend $52 million of its own money to build affordable housing in white municipalities, and to pay millions more in fees to the relator and the attorneys who brought the case.

Exactly which municipalities within the county had to bear the burden was not settled by Judge Cote’s decision, which only created yet another round of divisive negotiations that to this day have not been brought to an amicable resolution. Yet the only comment that the lengthy HUD Final Rule makes about that and similar unfortunate litigation is that “courts have set forth how the section applies to specific policies and practices of HUD program participants”—a whitewash if there were ever one.

The sorry episode should come as no surprise to anyone who has followed the 40-year saga that commenced with the New Jersey Supreme Court’s decision in Mount Laurel in 1975. In that case, the Southern Burlington County N.A.A.C.P. sued the Township of Mount Laurel, not for racial discrimination, but for its failure to provide a fair share of housing for low and moderate income families in the state. Once again, the utter vagueness of the standard, coupled with the fierce resistance of local governments, stymied the program for years.

The fundamental mistake in Mount Laurel was to leave intact the local zoning laws that kept out low income residents, and instead force the township to come up with positive programs to create exceptions to its basic zoning wall—which it did, after a fashion, by rear guard actions that included designating for the new housing a wetland located behind an industrial park far removed from water and sewer connections. Ultimately, when affordable housing was built in Mount Laurel, few members of minority groups wanted to stray so far from their home base. Local widows occupied a large number of the units.

The sad truth is that this unbroken level of failure will be taken to a new level by HUD’s Final Rule. Yet HUD is unable to explain how the huge conditions attached to its grants will build a single unit of new housing for anyone anywhere. What is needed is a complete reorientation in approach that starts from the proposition that it is far easier and more sensible to remove barriers to entry than it is to subsidize forced entry by judicial decree once those local barriers are allowed to remain in place. Indeed, the only winners out of HUD’s new initiative are government administrators, lawyers, and pro-housing activist groups that salivate at the prospect of hauling the next Westchester County into court.

The Supreme Court recently had the opportunity to clip HUD’s wings in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., an opportunity not taken when the liberal majority of the court, which by a narrow five-to-four vote, unwisely upheld the ability of HUD to use a disparate impact standard. This standard is the source of much mischief, since it can be held that discrimination was “because of race, color, religion, sex, familial status, or national origin,” even in the absence of any intention to discriminate on any of these grounds. HUD’s Final Rule cites this case for the bland proposition that “the Supreme Court also acknowledged “the Fair Housing Act's continuing role in moving the Nation toward a more integrated society.”

The heavy level of HUD oversight made it highly unlikely that Texas engaged in any form of discrimination whatsoever. Indeed, even the five-member liberal majority recognized that HUD’s fixation could lead to serious problems:

It would be paradoxical to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing in our Nation’s cities merely because some other priority might seem preferable. Entrepreneurs must be given latitude to consider market factors. Zoning officials, moreover, must often make decisions based on a mix of factors, both objective (such as cost and traffic patterns) and, at least to some extent, subjective (such as preserving historic architecture).

The majority then remanded the case for further consideration, which in all likelihood will lead to less invasive oversight of the Texas agency. But in an odd way, HUD’s aggressive call to arms in its new Final Rule pays scant attention to any of the Supreme Court’s cautionary words. Indeed, HUD’s Final Rule is conclusive evidence that it is blissfully unaware of the trade-offs that stand in the path of sensible housing reform. There is little now that can be done to invalidate the entire Final Rule on facial grounds. But a self-help remedy remains in place. Every state county or municipality organization should think long and hard before taking a dime in HUD money.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Raisin' a Raw Deal

Richard Epstein*

Richard Epstein

Richard Epstein

Thanks to the Supreme Court’s decisions on Obamacare and same-sex marriage, public attention has been unfortunately drawn away from Horne v. Department of Agriculture, which deals with the Agricultural Marketing Agreement Act of 1937, under which the government stabilizes crop prices, like those of raisins.

Under the law, a Raisin Administrative Committee, consisting mainly of raisin growers appointed by the Secretary of Agriculture, requires each farmer to give, free of charge, a certain fraction of their crop to the United States government. Once received, the government can sell them in noncompetitive markets, give them away, or dispose of them “by any means consistent with the purpose of the program”—which means keeping prices high by limiting the supply of raisins for sale and destroying those that cannot be otherwise safely disposed. To complete the circle, net profits from the program, less government expenses, are distributed back to the raisin growers.

Stripped of New Deal newspeak, the marketing program institutes a textbook government-run cartel. Like monopolies, cartels raise prices, reduce output, and undermine social welfare, which would normally make them targets under the antitrust laws. Indeed, cartels are even more dangerous than a single-firm monopolist. The monopolist chooses efficient means of production to maximize his profits, even though, socially, the results are inferior to those generated by a competitive market. But a cartel cannot survive unless it offers some accommodation to inefficient producers that would, if left uncompensated, sell their commodities below the cartel price. Hence, like OPEC, the Department of Agriculture lets a central committee set quantity restrictions to keep all players happy. Franklin Roosevelt loved cartels for the votes they brought in, just as he opposed monopolies because they made ideal targets for his populist rhetoric.

The New Deal’s defense of cartels in agriculture exerted a transformative effect on American constitutional law. These cartels could only work on a nation-wide basis, so the Roosevelt administration persuaded the Supreme Court that the Commerce Clause of the Constitution was not limited to cross-border transactions between states, but reached first intrastate sales and, ultimately, the production and consumption of crops on individual farms as enshrined in Wickard v. Filburn.

 For the next seventy-plus years, these cartels worked with clock-like precision, until the Hornes, farmers in California, challenged their operation, first in 20022003 when they refused to turn over 47 percent of their raisin crop over to the government and then again in 20032004 when they refused to turn over 30 percent. The government fined the Hornes $480,000 for the value of the raisins, to which they tacked on an additional penalty of $200,000.

The fine and the penalty were challenged by the Hornes on the ground that the government seizure of their raisins constituted a taking under the Fifth Amendment, which states that “private property [shall not] be taken for public use, without just compensation.”

The most amazing part of this saga is not that the Hornes won, but that no one involved in the litigation used the word “cartel.” The Hornes had to avoid the term whose use would undermine their claim. A cartel arrangement is not just a naked taking. Its offset turns out to be the higher prices that the Hornes and other cartel members can fetch for their remaining stock of raisins in the open market, which should count as a form of in-kind compensation under the Takings Clause. Under traditional antitrust lingo, they are cheaters who work under the cartel umbrella. All power to them!

Nonetheless, the government did not wish to make an open admission that the Marketing Act fortifies cartels, lest they undermine the stabilization myth that helps shield these cartels from public disapproval. And the Supreme Court, which has already blessed these grotesque arrangements, could ill-afford to undermine the legitimacy of its own earlier rulings, including Wickard, which props up the modern welfare state, including Obamacare.

Right off the bat, Chief Justice Roberts’ entire takings discussion has a surreal quality because it ignores the real victims of this program, the public at large. The Court instead focuses only on the Hornes’ claim that the government seized their raisins, which is of course a paradigmatic taking that under current law is unconstitutional.

In its opening salvo, the government claimed that personal property, such as raisins, receive less constitutional protection than real estate. The Chief Justice rightly slapped that claim down, noting that the comprehensive phrase ”private property” includes all forms of wealth in private hands, even patents. The constitutional text offers no warrant for dividing the field into first and second-class forms of property. Once raisins received full protection, the government could not justify its marketing program by saying that the residual cash that came back at the end of each annual cycle removed any constitutional taint from the program. That residual cash from the program cannot possibly meet the standard of full and fair market value (that is, the measure of just compensation), and the Chief Justice rightly rejected Justice Sotomayor’s odd dissent that there is no taking at the front end because some compensation is offered at the end of the day.

From that point on, Justice Roberts entered choppy waters. He is no judicial revolutionary, and thus throughout his opinion he tries to make peace with the tattered constitutional jurisprudence that has long embraced a distinction between physical and regulatory takings. The latter restricts the ability of a property owner to use or sell his property, but leaves him undisturbed in the possession of his land. The Hornes are, of course, on the right side of that distinction given that the government tried to physically seize their raisins.

Yet Justice Roberts was unable to defend the line between physical and regulatory takings. Exhibit A was the Court’s 1980 decision PruneYard Shopping Center v. Robins, which, waving a free speech banner, held that there was no taking of a shopping center when its owner was forced to admit protestors on his property against their will. The right way to treat this case is as a partial physical taking of the property once the owner lost his right to exclude others from his property.

But Justice Roberts wrongly reimagined this deliberate entrance as a regulatory taking by equating partial use by others with a restriction on how one can use one’s own property. He then compounded the error by falsely claiming that the owner’s use of the shopping center was “largely unimpaired,” without ever explaining why PruneYard filed suit in the first place. Hence, he concluded the ersatz regulation did not go “too far.”

That last unfortunate phrase was lifted from Justice Holmes’ famous opinion in Pennsylvania Coal v. Mahon and has bedeviled the field ever since. With physical takings, the rule is that the government pays for whatever it takes, be it large or small. With regulatory takings, the Holmes distinction says that the property owner cannot claim that a taking occurred as a result of regulation so long as he retains some residual value. Yet Justice Roberts never explains why two forms of government action, both susceptible to potential massive abuse, should receive such different constitutional responses.

The point is painfully evident in agricultural markets, because the government could achieve most of its objectives by restricting through regulation the total amount of raisins each farmer could grow on his own land. The unified theory that the Chief Justice recognizes is needed for land and personal property now gives way to the indefensible intellectual distinction between physical and regulatory takings.

Once that distinction is buried, ironically, it turns out that the Hornes are the wrong plaintiffs in this case. The compensation for their physical taking consists not solely in the residual cash payout they receive. It is also the higher price that they can charge for their retained crops that makes them whole: if it did not, the cartel would collapse tomorrow. Accordingly, the proper challengers to the marketing orders are the consumers who should have a typical antitrust–type claim for collusion against the raisin market, which ironically they cannot bring under the misguided 1943 Supreme Court decision in Parker v. Brown that insulates government-sponsored cartels from the antitrust law.

Roberts’ reticence to tackle fundamental issues was equally evident in his unhappy resolution of the third question of whether the government could require a surrender of some portion of a farmer’s crops in order to sell the rest in interstate commerce. His answer—it cannot—is correct, but his analysis is not.

The doctrine of unconstitutional conditions has long made it impossible for the government to condition the granting of one right on the willingness of an individual to surrender a second, and then call the entire transaction “voluntary.” In many cases, this government “choice” given to private parties is tantamount to the choice that the robber gives to his victim: “your money or your life.” The government therefore must justify any condition it imposes by showing that it relates to the protection of a legitimate public interest. By way of example, the government can condition the sale of goods into interstate commerce so that they do not explode on public roads. But it cannot condition them on someone’s agreeing to waive their Fourth Amendment rights against search and seizure, or on payment of tribute to competitors anxious to preserve their monopoly position.

Unfortunately, a wretched 1984 Supreme Court decision, Ruckelshaus v. Monsanto, allowed the government to condition the licensing of a dangerous fungicide for sale on the willingness of its owner to share trade secrets, a constitutionally protected form of property, with his competitors. Justice Harry Blackmun blithely claimed that any firm that rejected the condition could always sell goods in foreign markets. Chief Justice Roberts, however, refused to overrule Monsanto with the glib remark that “raisins are not dangerous pesticides; they are a healthy snack,” without delving into whether Monsanto was wrong, which it was given that its transfer of trade secrets was no more warranted for dangerous products than safe ones

In the end, Horne counts as a partial victory over the government. But its long-term value is undercut by the confused tangle of legal doctrine that Roberts decision left in place. To be sure, the Chief Justice conveniently ignored the offsetting benefits from the marketing, and struck down the fines and penalties in the individual case. It now remains to be seen whether every raisin grower is free to defy the government mandate, or whether the government can switch to acreage restrictions or other devices to achieve the same end.

The public always pays a high price for muddled law. It leads to uncertain outcomes in future cases. And worse, it results in the perpetuation of indefensible constitutional doctrines. The line between physical and regulatory takings is essential to propping up the most destructive government initiatives, both state and federal. And the use of exactions and other unconstitutional conditions leads to massive abuses by government regulators. Chief Justice Roberts had the chance to go beyond incrementalism in the face of massive doctrinal disarray. We are all the poorer that he shunted off to one side the larger issues about New Deal programs that Horne should have brought front and center. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.