Why I Am Anti-Union

Schadenfreude. That was my reaction to a recent piece by Rick Moran:

A week ago, employees at the Gothamist and DNAinfo were celebrating after a successful vote to join the Writers Guild. The Gothamist is a noted New York City website that is devoted to covering local news. They operate affiliated sites in Washington, D.C., Chicago, Los Angeles and San Francisco.

But the reporters’ celebration was shortlived. Yesterday, the publisher of the Gothamist and its parent website, DNAifno, informed all employees that he was shutting them down.

Joe Ricketts, who founded Ameritrade, made the announcement in an email….

The question isn’t whether Ricketts was justified in pulling the plug. The question is why employees thought the outcome would be any different?

Many unions in 21st century America offer a fantasy.   Simple arithmetic would show even the dumbest worker that the dream doesn’t add up and that reality wins in the end. The best example of that is the drive for a $15 an hour minimum wage. When you disconnect the cost of labor from the value of labor, the numbers don’t add up and companies end up losing money or, at best, dramatically reducing profits. In the real world, radically increasing the cost of labor means increasing the price of the products sold. In the case of fast food restaurants, that means a reduction  in traffic leading to fewer customers and less profit.

But organized labor has sold the idea that there are no consequences to raising the minimum wage to $15 an hour. We are already seeing franchises moving rapidly to automate their operations as much as possible and reduce the number of employees — leading to job losses and, just as importantly, fewer jobs created.

The Gothamist employees are shocked, shocked I say, to find out that a news website doesn’t make money and even a billionaire can tolerate losing only so much money before throwing in the towel. Unionizing also brings other headaches that are intolerable to management unless they are gluttons for punishment.

The writing was on the wall for these employees, but they were blinded by their own delusions and naivete. [“Publisher Shutters Websites after Journalists Unionize“, American Thinker, November 3, 2017]

Schadenfreude because I have been anti-union for 60 years.

It began while I was in high school. I had a part-time job bagging groceries at a supermarket. The supermarket was unionized, as was the norm in my home State of Michigan. My wage rate was set by a contract between the supermarket chain and the union, which I had to join as a condition of employment.

After I had been on the job for several months, the manager of the supermarket added shelf-stocking to my duties. According to the union contract, I should have received a raise for doing something other than bagging groceries, which was the lowest-paid job in the store. I complained to the manager about my wage rate. He fired me. The head of the local union couldn’t be bothered to defend me because he knew that I was going off to college in the fall. And so I received no benefit for paying union dues out my measly earnings.

Did I owe those measly earnings to the unionization of the store? I doubt it. I was a fast and effective bagger, unlike the baggers who work where my wife does most of her grocery shopping. I filled a grocery bag so that it wasn’t too heavy or too light; I put the heavy items on the bottom and the crushable items on top; I separated produce and frozen foods from soap and other scented items; etc. Given my superior skill as a bagger, the effect of the union contract was to penalize me and transfer some of my earnings to the less efficient baggers who worked with me.

That’s a good enough reason to be anti-union. But there are other reasons, having to do with freedom of association and freedom of contract.

I have nothing against the formation of a union, in principle. The formation of a union as a voluntary organization is an exercise of the unenumerated right of freedom of association, which is contemplated in the Ninth Amendment to the Constitution of the United States. By the same token, when labor laws force a person to join union, that person’s constitutional right to freedom of association is violated.

Moreover, such laws violate the freedom of contract guaranteed in Article I, Section 10, of the Constitution of the United States. The violation impinges on the right of the individual worker to negotiate with an employer. By the same token, the violation impinges on the right of the employer to negotiate with each of his employees, taking into account their particular skills and performance.

Further, forced unionization impinges on the employer’s unenumerated constitutional right to the lawful use of his business property.

There is also the effect of unionization on employment. If the contracted wage rate is set below the wage rate that would obtain in the absence of unionization, workers (or many of them) are underpaid. In the more typical case, where a union strives to set a wage rate higher than the market-clearing rate, employers hire fewer workers than they would absent unionization. (There’s an obvious parallel with the minimum wage.)

I am always gladdened when I read that labor-union membership in the United States has declined, not just as a percentage of the labor force, but in absolute numbers. Personal responsibility isn’t dead in the United States, despite the efforts of most of the nation’s politicians an bureaucrats.


Related posts:
Freedom of Contract and the Rise of Judicial Tyranny
The Upside-Down World of Liberalism
The Interest-Group Paradox
Law and Liberty
Negative Rights
Government Failure: An Example
The Left and Its Delusions
Corporations, Unions, and the State
Judicial Supremacy: Judicial Tyranny
Substantive Due Process, Liberty of Contract, and States’ “Police Power”
Why Liberty of Contract Matters
Whiners
Society, Polarization, and Dissent

Why Liberty of Contract Matters

UPDATED 10/19/15

I wrote this four years ago “In Defense of Wal-Mart“:

There are no goon squads dragging unwilling people in from the streets to work in Wal-Mart stores. There are no Wal-Mart employees caged in their work areas. There are secret prisons in Arkansas where they send Wal-Mart employees who elect to move on to more highly compensated jobs at other companies.

People work at Wal-Mart because it offers them the best combination of pay, benefits, and working conditions available to them. In other words, employment at Wal-Mart usually is a step up, not a step down.

The attention of the worrying classes turned recently to Amazon, as John O. McGinnis notes:

The New York Times has recently portrayed Amazon as a workplace somewhere between the first circle of hell and a bad section of purgatory, with harsh supervisors and backbiting colleagues that are the inevitable consequence of the company’s management practices. I did not need Jeff Bezos’s demurral to doubt the accuracy of portrait. In a company this large, there will always be bad supervisors, intriguing colleagues and disgruntled employees that can support a lot of wild anecdotes. And the New York Times, a newspaper that even a former ombudsman has admitted is on the left, has an agenda of attacking business the better to justify an intrusive state. [“The Liberty to Work Under Tough Bosses,” Library of Law and Liberty, August 19, 2015]

McGinnis continues:

But let us suppose for moment that the Times portrait is more accurate than Bezos’s denial that overall these anecdotes capture the reality of the company.  Is it really any cause for concern? The employees chose to work there and can leave at any time: it is not a case of indentured servitude. The white collar jobs portrayed here pay good wages. And most important of all, we have a competitive labor market that serves the needs of employees and consumers alike. Even the Times’ description shows that many employees find the culture empowering and thrilling. Some employees stay for a long period. Others use the skills they learn to start their own businesses. It may well make perfect sense for some people to endure upfront unpleasantness—even of the kind that leads to occasional tears—to gain discipline and knowledge that will later stand them in good stead.

I couldn’t have said it better.

UPDATE:

The Atlantic reports on Amazon’s response to the Times story.  I gagged when I read this:

The company, in its post Monday, also did not challenge the other claim made in the Times story: that Amazon can be a challenging place for its female employees. One female employee, Molly Jay, who had received high ratings for years, found herself being called “a problem” after she began traveling to care for her father, who was stricken with cancer. Another, Michelle Williamson, a 41-year-old mother of three children, was told, in the words of the newspaper, “that raising children would most likely prevent her from success at a higher level because of the long hours required.” A third, Julia Cheiffetz, wrote in Medium, about being sidelined after having a child and being diagnosed with cancer. [Krishnadev Calamur, “A Blistering Response from Amazon,” October 19, 2015]

Life is full of choices. If you choose family over work, don’t expect your employers’ customers to pay you (or your employer) for time you spend away from work.

*     *     *

Related posts:

A Short Course in Economics
Law and Liberty
Creative Destruction, Reification, and Social Welfare
“Buy Local”
Substantive Due Process, Liberty of Contract, and States’ “Police Power”

Substantive Due Process, Liberty of Contract, and States’ “Police Power”

I published this post at Liberty Corner almost ten years ago. I was prompted to re-publish it (with minor changes) upon reading George Will’s column about Chief Justice Roberts’s egregious treatment of Lochner v. New York and substantive due process in the Chief’s otherwise commendable dissent from the majority in Obergefell v. Hodges.

*     *     *

Judge Raymond Randolph, in a speech to the Federalist Society’s National Lawyer’s Convention on November 11, 2005, discussed Judge Henry Friendly’s draft opinion in a suit challenging New York’s abortion prohibition in 1970. According to Juan Non-Volokh (Jonathan Adler) of The Volokh Conspiracy, Judge Friendly’s opinion

was never published because New York amended its law before the case was decided. Had it been issued, it would have been the first federal court opinion on the constitutionality of a state abortion law. Judge Randolph was one of Friendly’s clerks at the time, and kept a copy of the never-issued draft.

According to the draft, Judge Friendly would have upheld the law, not because he was anti-abortion, but because the law was a constitutional exercise of state power — and that many of the inherently arbitrary policy judgments about abortion should or should not be permissible are better made by elected legislatures than a panel of federal judges. As described by Randolph, the decision anticipated many of the subsequent questions about the legitimacy of non-prohibitory abortion regulations that would follow in the wake of Roe.

Aside from that, Randolph had much to say about substantive due process, privacy, and a Court that has lost sight of the Constitution in its zeal to attain certain results:

. . . Substantive due process is the idea that the Due Process Clause of the 14th Amendment protects rights even if they are not set out specifically in the Constitution.

The Due Process Clause states simply that ““nor shall any State deprive any person of life, liberty, or property, without due process of law.”” Given the theme of this conference, one must ask about the original meaning of these words. The 14th Amendment due process clause is identical to the due process clause in the Fifth Amendment, applicable to the federal government. Two current Justices — you may guess who they are –– think the phrase ““substantive due process”” is an oxymoron. Process means procedure, not substance –– and that is what it meant historically. That the due process clause ever came to apply to legislation, as it did for the first time in the infamous Dred Scott case, is strange enough. What is the process due from a legislature? A quorum? An accurate vote count? There is something else I find quite odd about this concept. In many of the substantive due process cases the Court has stated that ““fundamental liberties”” are protected. Roe v. Wade is an example. Freedom of religion is, by all accounts, a fundamental liberty. Are we to suppose that freedom of religion is a right the state can take away so long as it does so with due process? That would be protecting a civil right in one amendment, the First, only to allow it to be taken away through another.

The Framers were smart people; they could not have intended such an absurdity. And they did not. History shows that the meaning of ““liberty”” as used in the 5th and 14th Amendments is simply freedom from restraint — that is, imprisonment. This explains why the Framers placed the due process clause in the Fifth Amendment, which deals almost entirely with criminal proceedings. Learned Hand, found the historical evidence supporting this interpretation clear beyond — in his words –– any ““reasonable doubt.” Yet the chances of the Supreme Court going back to the original understanding are, I think, slim to none.

But . . . the Fifth Amendment does not deal exclusively with criminal proceedings, the Fourteenth Amendment has nothing to do with criminal proceedings, and both do explicitly prohibit the taking of life, liberty, or property without due process of law. Given the Due Process Clauses of the Fifth and Fourteenth Amendments, I do not see how a legislature can enact any law that simply amounts to a “taking” of liberty or property for no valid constitutional purpose.

The Framers were smart people, as Randolph says. That’s why the Constitution, in Article I, Section 9, says explicitly that “No Bill of Attainder or ex post facto Law shall be passed” by Congress. That’s why the Constitution in Article I, Section 10, says explicitly that “No State shall . . . pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts. . . .”

The Framers understood very well that obligation of contracts (or liberty or freedom of contract) is both a matter of liberty and a matter of property. To interfere legislatively with liberty of contract amounts to a deprivation of due process because such interference prevents willing parties from employing their labor or property in the pursuit of otherwise lawful ends. That is, the legislature finds them “guilty” of otherwise lawful actions by forbidding and penalizing those actions.

The concept of substantive due process is in bad odor, in large part because (as the Wikipedia article explained in November 2005) it

was first applied by the Supreme Court in a subsection of Dred Scott v. Sandford (1856), though it can be argued that the doctrine dates back to Calder v. Bull (1798). Dred Scott was a slave who claimed that passing into territory where slavery was prohibited destroyed his owner’s property rights over him. The court ruled in three parts. First, it argued that Dred Scott was not a citizen of the United States and therefore he had no right to liberty under the Constitution of 1856 — this argument, now harshly repudiated, is not based on the Due Process clause but did establish that the Court considered Dred Scott to be property. Second, the court argued that no Federal law could exist which per se appropriated property without advance notice and opportunity for judicial review — —this was a Due Process argument. Thus, the decision established lack of procedure violates Due Process just as much an unfair procedure. After the Fourteenth Amendment applied due process restrictions to states, the Supreme Court used this same doctrine to protect a liberty of contract by routinely striking down (such as in Lochner v. New York) those economic and labor regulations which restricted particular economic activities per se without opportunity for judicial review.

Lochner v. New York is the 1905 case in which the Supreme Court struck down a State statute that attempted to impose a maximum-hours limitation on bakers. Lochner is a bête noire to liberals because it triggered a wave of Supreme Court decisions deemed “pro-business” (as if business were an enemy). But Lochner and its offspring were decided rightly because they upheld, as a matter of due process, the Constitution’s explicit guarantee of liberty of contract. As Justice Peckham wrote for the Lochner majority,

[t]he [New York] statute . . . interferes with the right of contract between the employer and employees, concerning the number of hours in which the latter may labor in the bakery of the employer. The general right to make a contract in relation to his business is part of the liberty of the individual protected by the 14th Amendment of the Federal Constitution. Allgeyer v. Louisiana, 165 U.S. 578 , 41 L. ed. 832, 17 Sup. Ct. Rep. 427. Under that provision no state can deprive any person of life, liberty, or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment. . . .

This is not a question of substituting the judgment of the court for that of the legislature. If the act be within the power of the state it is valid, although the judgment of the court might be totally opposed to the enactment of such a law. But the question would still remain: Is it within the police power of the state? and that question must be answered by the court.

The question whether this act is valid as a labor law, pure and simple, may be dismissed in a few words. There is no reasonable ground for interfering with the liberty of person or the right of free contract, by determining the hours of labor, in the occupation of a baker. . . .

It is a question of which of two powers or rights shall prevail,-the power of the state to legislate or the right of the individual to liberty of person and freedom of contract. The mere assertion that the subject relates, though but in a remote degree, to the public health, does not necessarily render the enactment valid. The act must have a more direct relation, as a means to an end, and the end itself must be appropriate and legitimate, before an act can be held to be valid which interferes with the general right of an individual to be free in his person and in his power to contract in relation to his own labor.

Justice Holmes, in his famous dissent in Lochner, said that “[t]he 14th Amendment does not enact Mr. Herbert Spencer’s Social Statics.” Social Statics (according to the Wikipedia article in November 2005) is a “conception of social justice, which emphasized the responsibility of the individual for their [sic] nature and actions.” Holmes, in other words, preferred a paternalistic government, as opposed to the government of liberty and individual responsibility clearly intended by the Framers.

Lochner — properly understood — is not about enacting Mr. Spencer’s Social Statics nor (as usually charged) is it about achieving a certain “pro-business” result through “judicial activism.” Lochner is about honoring the Constitution’s explicit guarantee of liberty of contract, and about ensuring that that guarantee is not vitiated by legislative overreaching. It is a violation of due process when a legislature deprives citizens of liberty or property by enacting laws forbidden by the Constitution. And that, in essence, is what the Lochner Court said.

Turning to liberty of contract, I quote from Richard Epstein’s article in The Heritage Guide to the Constitution on freedom of contract (pp. 171-5):

What is clear . . . is that in the antebellum period the Obligation of Contract Clause was the only open-ended federal constitutional guarantee that applied to the states. . . .

Everyone conceded that the clause applied to ordinary contracts between private persons, including partnerships and corporations. . . .

. . . At this point, one way to read the clause is to hold that its prohibitions [affect prospective contracts] but are not absolute. The state may alter the rules governing future contracts only in ways that offer just compensation to all contracting parties in the form of greater security and stability in their contractual obligations. The three legislative reforms that arose most frequently in the early debates — a statute of frauds, a statute of limitations, and recording acts — are all measures that meet this standard.

By refusing to give the clause any prospective role, Ogden [1827] opened the gateway to partisan legislation that limited the ability of some parties to contract without imposing similar restrictions on their economic competitors. . . .

But liberty of contract survived Ogden. I have written here about the long life and eventual demise of liberty of contract, a demise that coincided with the rise of States’ “police power”:

The Court upheld [liberty of contract] in Bronson v. Kinzie (1843). According to The Oxford Guide to United States Supreme Court Decisions (Oxford University Press, 1999, p. 33),

Chief Justice Roger B. Taney held that [a] legislative attempt to modify the terms of [an] existing mortgage was an unconstitutional impairment of the obligation of contract. Taney agreed that a state could alter the remedies available to enforce past as well as future contracts. He nonetheless emphasized that such changes could not materially impair the rights of creditors. In broad language Taney extolled the virtue of the Contract Clause: “It was undoubtedly adopted as part of the Constitution for a great and useful purpose. It was to maintain the integrity of contracts, and to secure their faithful execution throughout this Union.”

The Oxford Guide continues :

The Court long adhered to the Bronson rule, invalidating state laws that interfered with contractual rights in the guise of regulating remedies. The decision was effectively superseded, however, by Home Building and Loan Association v. Blaisdell (1934), in which the justices ruled that contracts were subject to the reasonable exercise of state police power.

Just what is “reasonable exercise of state police power”? In Home Building and Loan Association, according to Chief Justice Hughes, writing for the Court, it is this:

We come back, then, directly, to the question of impairment. As to that, the conclusion reached by the court here seems to be that the relief [from mortgage foreclosures] afforded by the [Minnesota] statute does not contravene the constitutional provision because it is of a character appropriate to the emergency and allowed upon what are said to be reasonable conditions.

That is, the Court simply decided to uphold a Minnesota statute that altered the terms of a contract because it wanted to do so, not because it had constitutional authority for doing so. The Constitution doesn’t forbid States to impair contracts except in emergencies or to exercise their “policing power”; the Constitution flatly forbids States to impair contracts. A libertarian Court would begin to restore freedom of contract by reversing Home Building and Loan Association v. Blaisdell….

As for States’ so-called policing power, an article at FindLaw tells this tale:

[I]deas embodying the social compact and natural rights, which had been espoused by Justice Bradley in his dissent in the Slaughter-House Cases, 43 had been transformed tentatively into constitutionally enforceable limitations upon government. 44 The consequence was that the States in exercising their police powers could foster only those purposes of health, morals, and safety which the Court had enumerated, and could employ only such means as would not unreasonably interfere with the fundamentally natural rights of liberty and property, which Justice Bradley had equated with freedom to pursue a lawful calling and to make contracts for that purpose. 45

So having narrowed the scope of the state’s police power in deference to the natural rights of liberty and property, the Court next proceeded to read into the concepts currently accepted theories of laissez faire economics, reinforced by the doctrine of Social Darwinism as elaborated by Herbert Spencer, to the end that ”liberty,” in particular, became synonymous with governmental hands-off in the field of private economic relations. In Budd v. New York, 46 Justice Brewer in dictum declared: ”The paternal theory of government is to me odious. The utmost possible liberty to the individual, and the fullest possible protection to him and his property, is both the limitation and duty of government.” …

To the State was transferred the task of demonstrating that a statute interfering with the natural right of liberty or property was in fact ”authorized” by the Constitution, and not merely that the latter did not expressly prohibit enactment of the same.

In 1934 the Court in Nebbia v. New York 52 discarded this approach to economic legislation, and has not since returned to it. The modern approach was evidenced in a 1955 decision reversing a lower court’s judgment invalidating a state statutory scheme regulating the sale of eyeglasses to the advantage of ophthalmologists and optometrists in private professional practice and adversely to opticians and to those employed by or using space in business establishments.

And there we are. In a single year (1934) the Supreme Court demolished liberty of contract and created out of whole cloth what amounts to an unlimited “police power” for the States — liberty and property be damned.

It is long past time for a return to the substantive due process epitomized by Lochner, that is, to the defense of constitutionally guaranteed liberties against governmental usurpation of those liberties.

*     *     *

Related reading: Damon Root, “Yes, the 14th Amendment Protects Economic Liberty,” Hit & Run Blog (Reason.com), July 13, 2015

Signature

Substantive Due Process, Liberty of Contract, and the States’ Police Power

Judge Raymond Randolph, in a speech to the Federalist Society’s National Lawyer’s Convention on November 11, 2005, had much to say about substantive due process:

. . . Substantive due process is the idea that the Due Process Clause of the 14th Amendment protects rights even if they are not set out specifically in the Constitution.

The Due Process Clause states simply that ““nor shall any State deprive any person of life, liberty, or property, without due process of law.”” Given the theme of this conference, one must ask about the original meaning of these words. The 14th Amendment due process clause is identical to the due process clause in the Fifth Amendment, applicable to the federal government. Two current Justices — you may guess who they are –– think the phrase ““substantive due process”” is an oxymoron. Process means procedure, not substance –– and that is what it meant historically. That the due process clause ever came to apply to legislation, as it did for the first time in the infamous Dred Scott case, is strange enough. What is the process due from a legislature? A quorum? An accurate vote count? There is something else I find quite odd about this concept. In many of the substantive due process cases the Court has stated that ““fundamental liberties”” are protected. Roe v. Wade is an example. Freedom of religion is, by all accounts, a fundamental liberty. Are we to suppose that freedom of religion is a right the state can take away so long as it does so with due process? That would be protecting a civil right in one amendment, the First, only to allow it to be taken away through another.

The Framers were smart people; they could not have intended such an absurdity. And they did not. History shows that the meaning of ““liberty”” as used in the 5th and 14th Amendments is simply freedom from restraint — that is, imprisonment. This explains why the Framers placed the due process clause in the Fifth Amendment, which deals almost entirely with criminal proceedings. Learned Hand, found the historical evidence supporting this interpretation clear beyond — in his words –– any ““reasonable doubt.” Yet the chances of the Supreme Court going back to the original understanding are, I think, slim to none.

But the Fifth Amendment does not deal exclusively with criminal proceedings, the Fourteenth Amendment has nothing to do with criminal proceedings, and both do explicitly prohibit the taking of life, liberty, or property without due process of law. Given the Due Process Clauses of the Fifth and Fourteenth Amendments, it is unconstitutional for a legislature to enact a law that allows a “taking” of liberty or property, unless such a “taking” is specifically authorized by the Constitution.

By the same token, it is unconstitutional for a legislature to enact a law that the Constitution specifically prohibits. Article I, Section 9, of the Constitution says explicitly that “No Bill of Attainder or ex post facto Law shall be passed” by Congress. That’s why the Constitution in Article I, Section 10, says explicitly that “No State shall . . . pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts. . . .”

The Framers (who were very smart people, indeed) understood that obligation of contracts (a.k.a. liberty of contract or freedom of contract) is both a matter of liberty and a matter of property. The Framers understood that legislative interference in contractual arrangements is a deprivation of due process because such interference prevents willing parties from employing their labor or property in the pursuit of otherwise lawful ends. That is, the legislature finds them “guilty” of otherwise lawful actions by forbidding and penalizing those actions.

The concept of substantive due process is in bad odor, in large part (as Wikipedia explains) because it

was first applied by the Supreme Court in a subsection of Dred Scott v. Sandford (1856), though it can be argued that the doctrine dates back to Calder v. Bull (1798). Dred Scott was a slave who claimed that passing into territory where slavery was prohibited destroyed his owner’s property rights over him. The court ruled in three parts. First, it argued that Dred Scott was not a citizen of the United States and therefore he had no right to liberty under the Constitution of 1856 — this argument, now harshly repudiated, is not based on the Due Process clause but did establish that the Court considered Dred Scott to be property. Second, the court argued that no Federal law could exist which per se appropriated property without advance notice and opportunity for judicial review — —this was a Due Process argument. Thus, the decision established lack of procedure violates Due Process just as much an unfair procedure. After the Fourteenth Amendment applied due process restrictions to states, the Supreme Court used this same doctrine to protect a liberty of contract by routinely striking down (such as in Lochner v. New York) those economic and labor regulations which restricted particular economic activities per se without opportunity for judicial review.

Lochner v. New York is the 1905 case in which the Supreme Court struck down a State statute that attempted to impose a maximum-hours limitation on bakers. Lochner is a bête noire to liberals because it triggered a wave of Supreme Court decisions deemed “pro-business” (as if business were an enemy). But Lochner and its offspring were decided rightly because they upheld, as a matter of due process, the Constitution’s explicit guarantee of liberty of contract. As Justice Peckham wrote for the Lochner majority,

[t]he [New York] statute . . . interferes with the right of contract between the employer and employees, concerning the number of hours in which the latter may labor in the bakery of the employer. The general right to make a contract in relation to his business is part of the liberty of the individual protected by the 14th Amendment of the Federal Constitution. Allgeyer v. Louisiana, 165 U.S. 578 , 41 L. ed. 832, 17 Sup. Ct. Rep. 427. Under that provision no state can deprive any person of life, liberty, or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment. . . .This is not a question of substituting the judgment of the court for that of the legislature. If the act be within the power of the state it is valid, although the judgment of the court might be totally opposed to the enactment of such a law. But the question would still remain: Is it within the police power of the state? and that question must be answered by the court.

The question whether this act is valid as a labor law, pure and simple, may be dismissed in a few words. There is no reasonable ground for interfering with the liberty of person or the right of free contract, by determining the hours of labor, in the occupation of a baker. . . .

It is a question of which of two powers or rights shall prevail,-the power of the state to legislate or the right of the individual to liberty of person and freedom of contract. The mere assertion that the subject relates, though but in a remote degree, to the public health, does not necessarily render the enactment valid. The act must have a more direct relation, as a means to an end, and the end itself must be appropriate and legitimate, before an act can be held to be valid which interferes with the general right of an individual to be free in his person and in his power to contract in relation to his own labor.

Justice Holmes, in his famous dissent in Lochner, said that “[t]he 14th Amendment does not enact Mr. Herbert Spencer’s Social Statics.” Social Statics (as Wikipedia explains) is a “conception of social justice, which emphasized the responsibility of the individual for their [sic] nature and actions.” Holmes, in other words, preferred a paternalistic government, as opposed to the government of liberty and individual responsibility clearly intended by the Framers.

But Lochner — properly understood — is not about enacting Mr. Spencer’s Social Statics, nor (as usually charged) is it about achieving a certain “pro-business” result through “judicial activism.” Lochner is about honoring the Constitution’s explicit guarantee of liberty of contract, and about ensuring that that guarantee is not vitiated by legislative overreaching. It is a violation of due process when a legislature deprives citizens of liberty or property by enacting laws forbidden by the Constitution. And that, in essence, is what the Lochner Court said.

To underscore my point, I quote from an article by Richard Epstein in The Heritage Guide to the Constitution (pp. 171-5):

What is clear . . . is that in the antebellum period the Obligation of Contract Clause was the only open-ended federal constitutional guarantee that applied to the states. . . .

Everyone conceded that the clause applied to ordinary contracts between private persons, including partnerships and corporations. . . .

. . . At this point, one way to read the clause is to hold that its prohibitions are prospective but are not absolute. The state may later the rules governing future contracts only in ways that offer just compensation to all contracting parties in the form of greater and stability in their contractual obligations. The three legislative reforms that arose most frequently in the early debates — a statute of frauds, a statute of limitations, and recording acts — are all measures that meet this standard.

By refusing to give the clause any prospective role, Ogden [1827] opened the gateway to partisan legislation that limited the ability of some parties to contract without imposing similar restrictions on their economic competitors. . . .

Liberty of contract nevertheless survived Ogden, for 107 years. The Court upheld it in Bronson v. Kinzie (1843). According to The Oxford Guide to United States Supreme Court Decisions (Oxford University Press, 1999, p. 33),

Chief Justice Roger B. Taney held that [a] legislative attempt to modify the terms of [an] existing mortgage was an unconstitutional impairment of the obligation of contract. Taney agreed that a state could alter the remedies available to enforce past as well as future contracts. He nonetheless emphasized that such changes could not materially impair the rights of creditors. In broad language Taney extolled the virtue of the Contract Clause: “It was undoubtedly adopted as part of the Constitution for a great and useful purpose. It was to maintain the integrity of contracts, and to secure their faithful execution throughout this Union.”

The Oxford Guide continues, however, by outlining the death of liberty of contract:

The Court long adhered to the Bronson rule, invalidating state laws that interfered with contractual rights in the guise of regulating remedies. The decision was effectively superseded, however, by Home Building and Loan Association v. Blaisdell (1934), in which the justices ruled that contracts were subject to the reasonable exercise of state police power.

Just what is “reasonable exercise of state police power”? In Home Building and Loan Association, according to Chief Justice Hughes, writing for the Court, it is this:

We come back, then, directly, to the question of impairment. As to that, the conclusion reached by the court here seems to be that the relief [from mortgage foreclosures] afforded by the [Minnesota] statute does not contravene the constitutional provision because it is of a character appropriate to the emergency and allowed upon what are said to be reasonable conditions.

That is, the Court simply decided to uphold a Minnesota statute that altered the terms of a contract because it wanted to do so, not because it had constitutional authority for doing so. The Constitution doesn’t forbid States to impair contracts except in emergencies or to exercise their “policing power.” No, the Constitution flatly forbids States to impair contracts.

As for States’ so-called police power, an article at FindLaw tells this tale:

[I]deas embodying the social compact and natural rights, which had been espoused by Justice Bradley in his dissent in the Slaughter-House Cases, 43 had been transformed tentatively into constitutionally enforceable limitations upon government. 44 The consequence was that the States in exercising their police powers could foster only those purposes of health, morals, and safety which the Court had enumerated, and could employ only such means as would not unreasonably interfere with the fundamentally natural rights of liberty and property, which Justice Bradley had equated with freedom to pursue a lawful calling and to make contracts for that purpose. 45

So having narrowed the scope of the state’s police power in deference to the natural rights of liberty and property, the Court next proceeded to read into the concepts currently accepted theories of laissez faire economics, reinforced by the doctrine of Social Darwinism as elaborated by Herbert Spencer, to the end that ”liberty,” in particular, became synonymous with governmental hands-off in the field of private economic relations. In Budd v. New York, 46 Justice Brewer in dictum declared: ”The paternal theory of government is to me odious. The utmost possible liberty to the individual, and the fullest possible protection to him and his property, is both the limitation and duty of government.” …

To the State was transferred the task of demonstrating that a statute interfering with the natural right of liberty or property was in fact ”authorized” by the Constitution, and not merely that the latter did not expressly prohibit enactment of the same.

In 1934 the Court in Nebbia v. New York 52 discarded this approach to economic legislation, and has not since returned to it. The modern approach was evidenced in a 1955 decision reversing a lower court’s judgment invalidating a state statutory scheme regulating the sale of eyeglasses to the advantage of ophthalmologists and optometrists in private professional practice and adversely to opticians and to those employed by or using space in business establishments.

In a single year (1934) the Supreme Court demolished liberty of contract and created out of whole cloth what amounts to an unlimited “police power” for the States — liberty and property be damned.

It is long past time for a return to the substantive due process epitomized by Lochner, that is, a defense of constitutionally guaranteed liberties against legislative usurpations of those liberties.