What Justice Roberts Did Right This Week
On June 22, the Supreme Court released its decision in Horne v. Department of Agriculture. When I wrote about Horne after oral arguments last fall, I called it the “raisin ripoff” case because the federal government (specifically, the Department of Agriculture’s Raisin Administrative Committee) had demanded 47 percent of the Hornes’ crop for its “price stabilization” system back in 2002.
The value of those raisins was roughly $484,000. When the Hornes refused to obey the Department’s order to turn over the raisins, they were slapped with an assessment plus a fine amounting to $695,000. They fought back, arguing that the government had violated their rights under the Fifth Amendment because it sought to take their property without paying just compensation.
Litigation dragged on for years, with the case making two appearances in the Supreme Court.
Chief Justice Roberts’ majority opinion finally puts to rest the strained, desperate arguments that the government had hoped would keep this absurd policy going.
For one, he dismissed the claim that the Fifth Amendment was only meant to protect against takings of real property and that takings of personal property (like raisins) did not have to be compensated. Roberts noted that one of the reasons why the Constitution’s drafters included the just compensation requirement was that the people had suffered from uncompensated seizures of personal property by the British and did not want any of that in their new country.
Furthermore, he easily dealt with the Ninth Circuit’s idea that the taking of the property of raisin growers was constitutionally OK because the growers might benefit from the higher prices and also might get some money returned to them – besides which, no one forces them to go into the raisin business in the first place.
“Selling produce in interstate commerce, although subject to reasonable governmental regulations, is similarly not a special benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection,” Roberts replied.
The Court’s holding that the Department of Agriculture must pay just compensation if and when it takes growers’ output is a welcome defense of property rights. While the decision does not put an end to the Department’s manipulation of raisin prices or any of its other programs – it has “marketing orders” that cover twenty fruits and vegetables including pistachios, cranberries and tomatoes – having to pay for any crops taken will crimp these programs somewhat.
(Only Justice Sotomayor dissented, the “wise Latina” accepting the government’s collectivist notion that there is no constitutional taking if those who have their property seized might get something back.)
While Horne is a step in the right direction, it isn’t nearly enough. Government should not set or manipulate prices at all. Not for agricultural crops or anything else.
It’s worth reviewing exactly how we got to the point where productive Americans can have their property taken by government officials with the intent of keeping prices higher than their free market levels.
In the 1930s, influential but economically ignorant thinkers came up with the idea that national prosperity could be restored by raising the prices of crops. That would, supposedly, put more money into the farm economy, leading to more purchases of supplies and other goods by farmers, leading to a widening circle of prosperity for all. (Today, advocates of a high minimum wage use the same argument – the workers who get higher wages will spend the money, putting more money in the pockets of the businesses they deal with, and so on.)
That idea was irresistible to FDR and his “Brain Trusters” who did not think that ordinary people should be free to buy and sell as they please, but that federal officials needed to tightly control all commerce. The 30s were rife with state and federal laws to fix prices and create governmentally-controlled cartels. The most infamous was the National Industrial Recovery Act of 1933, but that law was declared unconstitutional in the 1935 Schechter Poultry decision.
Roosevelt threw a tantrum over that and other Court rulings against his anti-market policies and threatened to pack the Supreme Court late in 1936. The result was “the switch in time that saved nine.” That is, a couple of justices who had previously regarded New Deal legislation as going beyond the powers granted to Congress, switched over to the pro-New Deal side. After that, FDR’s legislation had clear sailing, including the law at the heart of Horne, the Agricultural Marketing Agreement Act.
The idea that agricultural markets needed government “stabilization” was a bad one in 1937 and remains so today. Free agricultural markets would benefit consumers and spare us the waste of good food, the waste of paying bureaucrats to mess with markets, and the waste that lobbying by big agricultural interests involves.
Getting rid of all of those programs is not the Supreme Court’s job, although a strong argument can be made that they are unconstitutional under a correct understanding of the Commerce Clause. (Professor Richard Epstein has nailed that down in this Virginia Law Review article.) The job belongs to Congress, which should repeal all of the various commodity price control and subsidy programs. (Read this piece by Cato Institute’s Chris Edwards to see the scope of the problem.)
But there’s the rub. Interest groups have been plying Congress for these favors for a long time. Many Republicans who profess their devotion to free markets support them, as do many Democrats who always insist that they’re so devoted to helping “the little guy.” We won’t get rid of these programs unless the next president makes doing so a high priority.
Are any of you announced or prospective candidates interested in doing that?
Originally posted on Forbes.com.
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