Monday, March 28, 2011

Constitutional Liability Rules

Gerard N. Magliocca

I thought I might use two posts to describe an idea that is still a work-in-progress. At moments of constitutional transition, a dissenting institution is often faced with a choice between accepting the new orthodoxy or facing harsh consequences for holding out. Nevertheless, that stubborn entity is still given a choice -- they are not simply ordered to comply. Why?

Compare two different approaches to African-American voting after Reconstruction. The 15th Amendment provides that states may not deny or abridge the right to vote based on race. The Fourteenth Amendment, by contrast, said that a state could do that but would see its delegation in the Electoral College and the House of Representatives reduced accordingly. One is an order and the other is not. Put another way, Section 2 of the Fourteenth Amendment operated as a constitutional liability rule.

Now why might we choose one approach over the other? My use of the term "liability rule" is deliberate because I think that transaction costs are part of the answer. This could be true across a few dimensions. For example, getting a political agreement on a more coercive "command" approach could just be too difficult. Another is that a dissenting institution may hold a minority veto such that it cannot be commanded to do anything without blowing up the constitutional structure, which is a transaction cost problem because it requires the development of a comprehensive alternative. Finally, the consent of an important institution, even under duress, may be needed to sustain the legitimacy of the constitutional change at issue.

The next post will give more examples of constitutional liability rules and explore instances in which that approach was rejected.

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