"Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries." – Ayn Rand, 1963*
Chapter 7 of James Ely's book, "The New Deal and the Demise of Property-Conscious Constitutionalism," chronicles the Supreme Court's timid retreat from a semi-efficacious defense of property rights, unsure of the propriety of property rights unless linked to the "public good," browbeaten by "public opinion," and savaged by the Progressives.
The new political outlook emphatically rejected the laissez-faire philosophy. Justice Louis D. Brandeis expressed this reform sentiment when he declared in 1932, "There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs." (Italics mine; p. 125)
"Experimentation" meaning that Progressivism was basically a John Dewey-esque program of applied political and economic Pragmatism. While "constitutionalism" relied on a strict interpretation of the Framers' principled meanings – an "ideology" regarded with hostility by Progressives and others of a collectivist stripe – Progressivism is an ideology empty of any principles except a desire and commitment to control, rule, and "harmonize" the whole country and make it fit into an authoritarian straightjacket. If a new" sin" tax or regulation of manufacturing or a new levy on corporate profits doesn’t work here, maybe it'll work over there, and if it doesn’t, we can try something else. Never mind the inconvenience to property owners and the dislocation of market forces the experiment produces. You can't achieve an omelet of "social equity" without breaking some eggs. Or some heads. Theories and principles and definitions just get in the way.
Borrowing from the Progressive legacy, President Roosevelt's New Deal program was grounded on the notion that government had an affirmative duty to promote the general social welfare….Congress and the states enacted an extraordinary array of measures that greatly enlarged governmental supervision of the economy and sought to redistribute wealth and economic power. This social welfare approach flatly contradicted the insistence on limited governmental activity, marketplace competition, and respect for property rights that were at the heart of traditional constitutionalism. (Italics mine; p. 125)
I emphasized "traditional" because a tradition is simply an old practice or "habit" to acknowledge something that might have been good and "worked" – as freedom has "worked" or proven its value. But if one's enemies snort at and wish to discard "tradition" because it's "old" and replace it with a haphazard, "let's see if this works" non-value, with submission to government authority, and with the populist "will of the people," a situation has been reached when the defenders of freedom should restate, renew, and perhaps even rediscover the founding principles which they beforehand only blindly revered. This the Court largely did not do.
Progressivism, on the other hand, is reminiscent of a comedian's holding down one social or economic "ill," only to cause one or more other "ills" to pop up elsewhere. The "ills" multiply exponentially every time he attempts to hold anyone of them down, and the comedic Progressives concoct more solutions to the "ills" they themselves have caused. Think "The Three Stooges," only what Progressivism has done to the country is no laughing matter.
Ely writes that the composition of the Court was almost evenly divided between justices who were hostile to the New Deal, those who were merely uneasy with it, and those who were committed Progressives:
The Supreme Court's stubborn defense of entrepreneurial values precipitated a constitutional crisis. Ultimately, under great political pressure and President Roosevelt's threat to pack the Court, several justices shifted their position and accommodated the New Deal's economic and social program. As a result of the constitutional revolution of 1937, the Court abandoned its historic role as a protector of individual property rights and permitted the federal government and the states to play a major role in directing American economic life. Thereafter, the Court relegated property rights to a secondary position and largely turned its attention to other matters. (p. 126)
For example, Ely cites a case involving mortgages and the quasi-theft or "taking" of property:
At issue in the leading case of Home Building and Loan Association v. Blaisdell (1934) was a Minnesota act imposing a limited moratorium on the foreclosure of farm mortgages. Designed to safeguard the ownership of homes and farms, the statute temporarily suspended the mortgage obligation while allowing the mortgagor to remain in possession of the payment of a reasonable rent. The mortgage moratorium was similar to the debtor-relief laws often declared unconstitutional in the nineteenth century as an impairment of the obligation of contract.
By a five-to-four margin, the Supreme Court held that the moratorium did not violate the contract clause. Clearly influenced by the economic emergency, Chief Justice Charles Evans Hughes ruled that contracts were subject to the reasonable exercise of state police power….He weighed the contractual rights of the parties against the public-interest arguments of the state to determine whether the infringement of the mortgage contract was reasonable. (pp. 126-127)
Ely highlights the Court's continuing downward fall from principles to wistful pragmatism:
The Supreme Court also approved federal regulation of agricultural production [a field the Court had previously conceded was the states' exclusive realm of control]. New Dealers hoped to increase crop prices by restricting the supply. In Munford v. Smith (1939) the justices affirmed the second Agricultural Adjustment Act, which provided for the imposition of marketing quotas on farmers to reduce the volume of crops. The Court went a step further in Wickard v. Filburn (1942) and upheld federal power to set quotas for wheat consumed by a farmer for livestock feed and household food on his own land. Justice Robert H. Jackson, writing for the Court, defined congressional authority under the commerce clause in sweeping terms, rejecting the distinction between direct and indirect effect on interstate commerce. Jackson reasoned that the cumulative effect of consumption of a small amount of homegrown wheat by many farmers could have a substantial influence on the market price of wheat.
For all practical purposes, the Supreme Court recognized an unqualified power in Congress to reach any economic activity under the commerce clause. Indeed, the justices stated in 1946 that federal commerce power was "as broad as the economic needs of the nation." (Brackets mine; p. 136)
It is obvious that it never occurred to the justices to ask themselves whether the solution to answering the nation's "needs" was to get the government out of the economy, where the Framers never intended it to be.
In more instances than can be repeated here, Ely records the "progress" of the Court to becoming a virtual befuddled handmaiden of Progressivism under the New Deal. The Court had resorted to what can only be characterized as Constitutional bean-counting. "These beans are permissible, those others, not. And those over there might not be beans at all, but we're not sure. We'll err on the side of caution. We don’t want the president and the populace getting mad at us again."
Ely chronicles the succession of taxes and controls imposed by Congress:
In the Emergency Price Control Act of 1942, Congress conferred extensive powers on the Office of Price Administration to fix prices of commodities "which will be generally fair and equitable."….
…[T]he Court…[in 1944] affirmed the act's rent control provisions, rejecting the contention that such controls amounted to a taking of property….
Another New Deal innovation was the use of federal taxing power for social welfare purposes. The Social Security Act of 1935 imposed a special tax on employers and employees for the payment of benefits to the aged…Adopting a liberal view of the taxing power, the Supreme Court in Helvering vs. Davis (1937) expansively ruled that Congress could spend money for the general welfare….In effect, the Court sanctioned a comprehensive power in Congress to levy taxes for any purposes that were thought to benefit the public….
Once the Supreme Court accepted the New Deal, the justices abruptly withdrew from the field of economic regulation. This reflected a monumental change in the Court's attitude toward property rights and entrepreneurial liberty. (Brackets mine; pp. 138-139)
Ely emphasizes that the "cornerstone of this new constitutional direction was a judicially created dichotomy between property rights and personal liberties." He quotes James L. Oakes in his 1953 Washington Law Review article, that, as far as the Court was concerned, "property rights were essentially confined to a legal dust bin."
Ely's last chapter, "Property Rights and the Regulatory State" is not so much a discussion of the timorous, muted revival in the Court of a concern for property rights as it is a sketch of a vanquished nation, vanquished by its own government and the highest court in the land.
Businesses adjusted to the regulatory régime and prospered. Although sharp differences remained concerning the precise role of the government in managing the economy and controlling the usage of private property, few urged a return to a largely unregulated free market before the New Deal. The dominant political ideology supported the regulatory state and looked for a government solution to economic ills….The federal and state governments mushroomed steadily in size and played a large role in nearly every aspect of the economy. As the network of economic regulations grew more intrusive, there was an erosion of individual property rights. Some commentators even suggested that the basic notion of private property ownership had disintegrated. (p. 142)
In truth, what was disintegrating was the epistemology and metaphysics of the justices. Ely names another culprit on the Court:
In the 1950s and 1960s, the Supreme Court, under the leadership of Chief Justice Earl Warren [appointed by President Dwight D. Eisenhower], embraced the jurisprudence of substantive liberalism. Striving to achieve egalitarian goals, the justices sanctioned the growing welfare state and consistently deferred to legislative bodies with respect to economic and social issues….In this climate, the security of property and contractual rights, long a primary function of the federal judiciary, received scant attention. Heavily influence by New Deal constitutionalism, the Court virtually eliminated property rights from the constitutional agenda for several decades. (p. 143)
The post-New Deal decision-making behavior of the Court vis-à-vis property rights protection can be likened to a man in a semi-coma, babbling incoherently one moment, making semi-lucid observations the next. Ely records some of the oscillating rulings of the Court. In regards to the "takings" clause:
As discussed earlier, the Supreme Court has long recognized that land use controls could have such a severe economic impact as to represent a taking of the property. In practice, however, the justices have been reluctant to invoke the doctrine of regulatory taking and have allowed Congress and the states wide latitude to impose conditions on the use of land. The Court has not established any formula for determining when a restriction of property has gone too far, preferring instead to rely on an ad hoc, case-by-case inquiry. Nonetheless, the justices have repeatedly declared that regulations are not unconstitutional simply because they prevent the best use of land or dramatically diminish its value to the owner. (p. 160)
Ely cites one notable instance of this policy:
The Court has allowed cities to enact land use regulations that enhance the aesthetic features of municipal life. In Penn Central Transportation v. New York (1978), the Court by a six-to-three vote, sustained the designation of Grand Central Terminal [now privately owned] as a historic landmark, even though such an action prevented the landowner from modifying the building in any manner without municipal permission, thereby causing a drastic reduction in its value. Justice William Brennan, speaking for the Court, stressed that the landowner could use the terminal for its original purpose and was able to earn a reasonable return on its investment….But the factors, such as "distinct investment-backed expectations," and the "character of the government action" are hazy, and there is no indication of how much weight should be assigned to each factor. The result is a fact-bound and murky test heavily loaded in favor of governmental regulation. In dissent, Justice [William] Rehnquist argued that a taking had occurred and that the costs of a historic preservation program should be borne by taxpayers generally, not individual landowners. (Brackets and Italics mine; p. 160)
One could also argue that the one "taking" created another "taking": The taking of tax dollars "generally" to assist the property owner in complying with the terms of the taking of his property for "historic preservation" purposes. One supposes that Justice Rehnquist overlooked that angle. But then, the Court had already sanctioned a medley of takings for the "general welfare" and "public benefit" reasons, so that aspect of the Grand Central Terminal case naturally would not have occurred to him.
In another land use case, Agins v. City of Tiburon (1980), Ely reports that the Court sided with the municipality and its zoning restriction of construction on five acres by a developer of single-family homes.
The Supreme Court rejected the argument that the enactment of the ordinance constituted a taking or property. Writing for the Court, Justice [Lewis F.] Powell noted that the application of zoning laws effected a taking only "if the ordinance does not substantially advance legitimate state interests…or denies an owner economically viable use of his land." He found that the Tiburon ordinance served a legitimate function by preserving open space and enduring the orderly development of residential property. (Brackets mine; p. 161)
Ely introduces the reader to a new kind of "property" the Court was willing to consider, one that is so bizarre and irrational that one can hardly credit the justices with any kind of moral standing: Welfare and entitlements.
In Goldberg v. Kelly (1970) the justices, by a vote of five to four, edged towards acceptance of the new property concept. They held that New York violated due process procedural guarantees by terminating welfare benefits without a prior hearing. Ultimately, however, the Supreme Court declined to treat most entitlements under government programs as traditional property rights for the purpose of due process. Instead, the Court viewed government benefits as merely statutory creations and preserved in large measure of legislative authority to manage and even eliminate benefit schemes….
Justice Brennan, a persistent critic of extending constitutional protection to traditional economic interests, was a leader in the move to recognize entitlements and public employment as forms of property. Brennan thus refurbished the conservative doctrine that respect for property rights secured political freedom to serve egalitarian ends. The conservative justices, on the other hand, rejected the new property theory, adopting the liberal approach that the courts should defer to state control of economic matters. The result of this development was that government benefits were accorded some procedural safeguards but never received the same protection as traditional property rights. (p. 170)
One is at a loss to classify such thinking as schizophrenia, or as evidence of a split personality disorder.
In his short Epilogue, James Ely sounds a dour, pessimistic note about the future of property rights in the context of today's political climate, especially (from my own perspective) given the abusive, arrogant, wholly Progressive (some would say Marxist) character of the current administration.
…[T]he facile suggestion in many judicial opinions after 1937 that economic questions should be left entirely to the political process is also troubling. If individuals or enterprises have only those property rights that legislators choose to recognize, then property ownership is simply a matter of legislative sufferance. No other important rights are treated in such a cavalier fashion….Much legislation frankly seeks to achieve a wider distribution of wealth by divesting owners of their right to use property to its maximum advantage and by altering contractual arrangements. Such opportunistic behavior is less painful to lawmakers than levying taxes to finance government programs. (Italics mine; p. 174)
On the contrary, other rights, those to be found in the Bill of Rights, are or have been treated in worse than a "cavalier fashion," from gun ownership, to the right to assembly (or association), to freedom of speech vis-à-vis criticizing Islam and campaign finance law restrictions. The "regulatory state" knows no limits on its appetite for power. No right today is sacrosanct or beyond the government's wish to curtail or abolish.
Only just recently, Senate Majority Leader Harry Reid (D-NV), in the wake of his defeat at the Cliven Bundy Ranch in Nevada, introduced a bill to abridge political speech. Breitbart's Big Government reported on May 18th:
On May 15, Senate Majority Leader Harry Reid (D-NV) announced the Senate Judiciary Committee will hold a hearing on June 3 on amending the U.S. Constitution to limit political speech. If ultimately adopted, it would mark the first time in American history that a constitutional amendment rescinded a freedom listed as among the fundamental rights of the American people.
The proposed amendment was introduced by Sen. Tom Udall (D-CO) as S.J.R. 19 and if ratified would become the Twenty-Eighth Amendment. It provides in part that “Congress shall have power to regulate the raising and spending of money and in-kind equivalents with respect [to] the Federal elections … [and] State elections.” The proposed amendment includes a provision that “Nothing in this article shall be construed to grant Congress the power to abridge the freedom of the press.” So Breitbart News, The New York Times, and the mainstream media would be able to say whatever they want, but citizens and citizen groups such as the National Rifle Association could not.
Ely seems to agree with me when he ends his book:
The future path of the Court is difficult to predict. A return to a vigorous property-conscious constitutionalism, however, appears highly problematic. Despite renewed interest in the rights of property owners, it would require a sea change in the legal culture before property rights are accorded the same level of protection as other individual rights. In the last analysis, the viability of property rights, perhaps like all other individual rights, rests on a broad popular acceptance. The courts will continue to strike a balance between popular democracy and private property ownership. (Italics mine; pp. 174-175)
Again, on the contrary, a recognition of individual rights does not rest "on a broad popular acceptance" of them, but on the integrity and perspicuity of justices. No balance "between popular democracy (the Framers founded a republic, not a democracy, which they abhorred) is possible." Mob rule does not establish the validity of individual rights. The problem can be solved when the justices recognize, as Ayn Rand recognized, that "intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries."
The Guardian of Every Other Right: A Constitutional History of Property Rights, by James W. Ely, Jr .. New York: Oxford University Press, 2007. 216 pp.
*From "For the New Intellectual," in For the New Intellectual: The Philosophy of Ayn Rand, by Ayn Rand. New York: Signet, 1963. 224 pp.