Judicial Activism and the Death of the Auto Industry: Part One

It seems that it is hard to keep up with all of the changes coming from Washington. The President’s proposals are coming through so fast, that conservative representatives scarcely have time to read them, let alone put up a good defense. Republicans are being forced to pick their battles. They have to decide where they can stop the new Administration, and where they will only waste their time trying to stop it. The latest choice seems to be between opposing Sonia Sotomayor’s nomination to the Supreme Court, and focusing on the federal government’s massive takeover of private industry (yes, I think firing CEOs, designing products, mediating bankruptcy disputes, and selecting which dealerships to shut down qualifies as a takeover). Many people believe we must decide if it is more important to stand up to the liberal social agenda that could be moved through the courts, or stop the slide towards a socialist economy in the legislature. I would like to argue that the two issues are one and the same, and that it is dangerous to think otherwise.

Everyone seems to understand that allowing judges to make decisions based on a loose interpretation of the Constitution can lead to a “legislate from the bench” mentality. It places the will of the people and their elected representatives beneath the desires of a handful of federal judges. We have learned, over the years, how this type of legal reasoning can force unpopular legislation on us in areas such as religious expression, regulation of “hate” speech, affirmative action, abortion, and other social policies. We allow them to be the final voice in all matters. Nine imperfect people. The only means we have, to keep their power under control is the Constitution. When we allow them to value their own feelings or empathy for others over the law, they cannot be objective and we are left at their mercy. While most of us seem to understand the potential for corruption in this area, there is another aspect that I believe we have overlooked. Judicial activism has not only led to a weakening of checks against the judicial branch, it has also led to a weakening of checks against the legislative and executive branches. I believe that the trend towards empathetic interpretation is largely responsible for the recent government interference in private businesses. In the coming weeks, I would like explore the events that have led us to such a place. I will attempt to show that our problem with big government started as a problem with bad judges.

Original Restraints

Commerce Clause

“The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.”- James Madison

The Commerce Clause (Article 1 Section8 Clause3) in the Constitution allows for Congress to regulate commerce between states, with foreign nations, and with Native Americans. Before we go any further we must understand the meaning of “interstate commerce.” When the clause was originally written, there was fierce debate between Federalists and Anti-Federalists. Anti-federalists were fearful of a central government abusing this clause and becoming intrusive. The Federalists believed that this clause was necessary (and would not be abused due to the specific language) to prevent the abuses caused by protectionists tendencies of some states under the Articles of Confederation. In the course of their discussions, they often used the words trade and commerce interchangeably. Commerce was a word that described buying, selling, and bartering. We also know that the Founders valued the rights of individuals and states far more than the powers of federal government. Both the Declaration of Independence and the Constitution, show their concern with protecting a true free-market society and preserving the powers of each state. We can conclude that the power to regulate interstate commerce refers to mediating trade practices between states. It exists to prevent one state from practicing abusive trade with another state (ex.: A coastal state would not be able to abuse a landlocked state by charging outrageous taxes for goods that arrive from Europe.) It does not grant the federal government the power to regulate any and all industry within our borders.

Necessary and Proper Clause

The Necessary and Proper Clause (Article 1, Section8, Clause 18) states: “The Congress shall have Power – To make all Laws which shall be necessary and proper for carrying into Execution the foregoing (enumerated) powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” Simple Enough. Congress can pass laws, which will assist members of the government in carrying out powers that were specifically granted in the Constitution. Period.

The First Perversions

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”-Tenth Amendment of the United States Constitution

Both the Commerce Clause and the Necessary and Proper Clause, deal with the powers of Congress. The expansion of powers based on these clauses, however, came from the judiciary branch.

Gibbons v. Ogden 1824

Thomas Gibbons was a steamboat operator. He had received a license from Congress to carry out the coasting trade. The State of New York had granted a small group of investors the sole right to operate steamboats in New York. Aaron Ogden was a steamboat operator working for this group. When Thomas Gibbons was denied the right of passage into New York, he filed a lawsuit against Ogden. Ogden’s side claimed that as long as he kept his operations inside New York, Congress had no right to interfere. Gibbon’s side claimed that the state of New York was prohibiting interstate trade by restricting the transportation of goods between states. The court sided with Gibbons. The State of New York may have indeed, impeded interstate trade. And while the ruling itself, may have been justified, the expressed reasoning behind the ruling was a bit sloppy to say the least. The Justices decided that commerce “among the states,” could be interpreted as commerce “intermingled with” other states. Chief Justice Marshall believed that since transportation was necessary for trade, transportation from one state to another should be considered commerce, not that only transportation which directly influences trade should be considered commerce. The court effectively changed the meaning of the Commerce Clause from the government having the power to mediate trade disputes between states, to the government having the authority to regulate any form of trade or movement that affects multiple states. This was the first step in the expansion of federal control over private industry.

Interstate Commerce Act of 1887

In 1887, the Interstate Commerce Act was passed. This act created the Interstate Commerce Commission, the first true national regulatory agency. Citing the decision in Gibbons v. Ogden, the agency would oversee the railroad industry, focusing primarily on shipping rates. At this point, the federal government had switched from merely mediating disputes between states, to regulating an industry.

Houston E.& W. T. Ry.Co. v. United States 1914

The Houston Railway Company managed an interstate railway that ran primarily through Texas, but also into Shreveport, Louisiana. They charged one rate for shipping that remained within the state, and a higher rate for shipping products across state lines. After the Railroad Commission of Louisiana filed a complaint, the Commerce Commission stepped in. They believed that the lower rate for intrastate traffic was unfair, and attempted to force the company into raising the price to that of interstate shipping. The case went before the Supreme Court. Houston Railway argued that the Commerce Commission had no right to dictate price over the lines that ran exclusively in Texas (from Marshall to Dallas). The Supreme Court rejected this argument. They reasoned that if the intrastate lines could have any effect on the business of other states, it could be regulated by the federal government.

After the Industrial Revolution, America was a much smaller place. People traveled from one state to another more frequently, and under the new broad definition of the Commerce Clause just about every business could, in one way or another, could be considered to affect “interstate commerce.” It started in the Supreme Court with one, poorly-defined ruling. Surely the Justices involved believed they were securing “fairer” trade policies for America. However, in their attempt to level the playing field, they gave the federal government almost limitless authority over private industry. Once Congress had this new power, they would not let go easily. In the next chapter, we will see how the federal government continued to chip away at the tenth amendment, and how the Supreme Court got the New Deal rolling.