Wednesday, December 21, 2011

The Roberts Court’s Bad Romance

Frank Pasquale

Recently a coalition of Missouri payday lenders implied "that standing up for high-interest-rate lenders is somehow analagous to the acts of the 'poor people who followed Dr. King and walked with him hundreds of miles because they believed in civil rights that much.'" Because we all know that liberty means little if you're not free to take a loan out at 444% APR.

In The Irony of Free Speech, Owen Fiss warned that the language of the First Amendment would lose its emancipatory potential as courts used it to gut progressive legislation. In a recent essay in Democracy Journal, Jedediah Purdy confirms those fears. His thoughts on last term's Sorrell v. IMS Health are particularly incisive on the topic of commercial speech, which the Court appears ready to radically rethink:

[Evan as t]he Court has tenuously maintained the formula that commercial speech receives lower protection than “core” political speech, it has struck down limits on advertising for legal services, liquor stores, and tobacco products (in the last instance, invalidating a law that forbade tobacco advertising near schools). A certain amount of the everything-for-sale quality of our public spaces owes directly to the Court’s protection of commercial speech. The justices have never said, though, that advertising deserves the same very strict protection as political debate. Sorrell v. IMS, the Vermont case, comes as close as any to dissolving all distinction between advertising and argument.

The stranger and more innovative aspect of Sorrell is that the case extended First Amendment protection beyond anything recognizable as speech. . . . [M]ost of what the Vermont decision protects is not verbal expression or even political spending but simply the sale of data. Sorrell moves toward constitutionalizing an open market in information, at least where the data will inform marketing decisions and the regulation has different effects on different market actors. As the right to speak implied the right to spend and the right to argue implied a right to advertise, now spending and advertising imply a right to buy and sell the information that will go into marketing (which is itself robustly protected as speech). So there is now a constitutionally protected interest in exchanging information on the same terms as everyone else in the market. Any limit on information markets, Kennedy reasoned, would tilt the playing field in favor of those who had more access to data—--in Vermont’s case, generic drug companies and public-health agencies. . . . . [The Court] put[s] new intellectual premises to work in constitutional law, premises that themselves form no part of the Constitution.

Ronald Dworkin's 2007 jeremiad may have been premature, but recent terms have confirmed the neo-Lochnerism of the Court's majority. It's an institution that will barely lift a finger for brutalized protesters or citizens routinely humiliated and detained due to security theater. But if Sorrell is any guide, it will soon be scrutinizing consumer and investor protections embedded by law into "guidelines for . . . communications by energy and financial companies, restrictions on the uses pharmaceutical companies may recommend for their drugs, and various controls on disclosure of patient information by doctors and hospitals." Who cares about pervasively racialized law enforcement? There are FDA regs to review.

In my last post, I noted the widening divide between courts' and agencies' respectful treatment of trade secrets, a form of corporate privacy, and their increasing disdain for personal privacy. In Sorrell, the Court used the First Amendment to accelerate the trend, claiming that free speech rights trumped any privacy rights that Vermont's legislature tried to protect. Purdy explains the historical antecedents of today's laissez-faire judicial juggernaut:

The First Amendment has helped the Supreme Court do for the consumer capitalism of the Information Age what freedom of contract did for the Industrial Age: constitutionally protect certain transactions that lie at the core of the economy. This makes unequal economic power much harder for democratic lawmaking to reach, because there are only a few ways to reduce the effects of economic inequality: redistribute wealth, guarantee certain goods (such as education or health care) regardless of wealth, and limit what the wealthy can do with their money. Constitutional protection of marketing and spending takes the last option off the table at a time when the other two are politically embattled. Whether in elections or in marketing and the vast data economy behind it, the market itself, with all its inequality, is ever more thoroughly constitutionalized as a realm of freedom.

My only problem with Purdy's argument is the reification of "the market" in the last sentence here. In Sorrell, one of the main reasons there was data in the first place was that the state of Vermont required records to be kept of pharmaceutical transactions. Legislation like the Hatch-Waxman Act prescribes a regime of protections and obligations for drug manufacturers that is extraordinarily complex, and continually contested. The FDA is involved in every step of a drug’s approval, and significantly constrains its marketing. Medicare Part D legislation also significantly increased the U.S. government’s involvement in the pharmaceutical sector, providing an enormous amount of funding for spending on drugs for the elderly. International treaties like TRIPS also play a very important role in the pharmaceutical sector.

In short, if there is one sector where state action is not simply a side constraint on “the market,” but rather serves to constitute it, that sector is the pharmaceutical industry. Judicial interventions like Sorrell can't bring us closer to a "free market" that never existed in the first place. They just make a long-standing private-public partnership less responsive to the public interest.

Free Markets: Ideal or Illusion?

I only bring up this quibble with what is in the main a remarkably insightful article because there is a major divide between progressives on the nature of "free markets." Dean Baker insists that there are genuine economic principles that govern "free markets," and that progressives should embrace them. Barry Lynn's efforts to revive antitrust law resonate with Baker's views, as do most interventions from center-left think tanks in DC. Ideals of competitive markets also deeply informed the Affordable Care Act, as leading Democrats abandoned a public option in the hope that insurance exchanges could finally make competition work in health care.

Against this orthodoxy, James K. Galbraith has argued that Republicans long ago abandoned any pretense of supporting "free markets," and liberals should now do the same. I'd also place in the Galbraith camp Bernard Harcourt (author of The Illusion of Free Markets) and Michael Lind (a big advocate of industrial policy). To steal a formulation of Stanley Fish, they believe that there's no such thing as a free market, and it's a good thing, too. The question for these thinkers is not shifting the boundary between state and market, but instead assuring that the inevitable combination of the two meets human needs as efficiently and well as possible.

In any event, I particularly liked this closing reflection from Purdy's article:

Taken to their limit, [cases like Sorrell and Citizens United] would set aside the intellectual and political gains of decades of struggle in the twentieth century: the New Deal recognition that the country must take responsibility for shaping its own economy, and the decision to remove the old American romance with economic libertarianism from constitutional judging. It is the revival of that bad romance that makes the memory of Lochner relevant now.

There is another dimension to the "bad romance" here; the crony capitalist marriage of big business and big government that suffuses the exchanges blessed in Citizens United and Sorrell. This is not the jurisprudence of the "free market," but rather of a corrupted hybrid economy devoted to little more than maximizing the wealth of CEOs and Wall Street grandees. The Bob Roberts Court may well be repeating Lochner-era mistakes, but the real conservatives are the people who expose its radicalism.

Simulposted: Concurring Opinions.

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