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So Phillips had to submit to the state’s regulations if he wished to remain in business. But why this compulsory re-education program? Phillips does not insist that Colorado limit marriage solely to unions between one man and one woman. He only resists providing them services that go against his religious conscience. He routinely supplies his gay and lesbian customers with off-the-rack items for use in same-sex marriages. And he has courteously directed his gay and lesbian customers to other establishments that supply services for same-sex weddings. Phillips thus tolerates and accommodates the practices of others with which he does not agree. But the Colorado Commission decidedly does neither.
Now, the case is before the Supreme Court—and I have coauthored a brief with lawyers Sean Gates and David Shaneyfelt on behalf of a group of law and economics scholars who have urged the Court to vindicate Phillips’s claim for freedom of religion and speech. Why? Because we dislike government bullies, whose pretentions to superior wisdom lead them to coerce ordinary citizens to bend to their will. They have forgotten or repressed the words of Justice Robert Jackson in the famous flag salute case of Barnette v. West Virginia, decided in 1943 in the middle of World War II. Barnette held, without differentiation, that the constitutional protection of freedom of religion and speech blocked West Virginia from forcing the children of Jehovah’s Witnesses to recite the Pledge of Allegiance in order to remain in the public schools. “If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us.” Certainly, the petty dictates that the Colorado Commission directed toward Jack Phillips is not one such exception.
In our brief, we asked this simple question: When does it make sense to impose an obligation of universal service? The time-honored answer, as I have urged elsewhere, is in the case of common carriers and public utilities, which are not in a position to refuse service because they are the only supplier of standardized, impersonal, but essential services such as rail transportation, electricity, power, and communication, without which participation in ordinary life is exceedingly difficult. Historically, these services were supplied most cheaply by a single provider, which therefore had the correlative duty to serve all customers on what are known as FRAND standards—fair, reasonable, and nondiscriminatory terms.
The necessary corollary is that duties of service should never be compelled in a well-organized competitive market, an issue that lies at the heart of the Masterpiece dispute. We are far removed from the days of Jim Crow when the unified exercise of state power and private violence blocked the entry of new firms to serve black citizens who were systematically deprived of rights to vote or to participate in public affairs. We are long past the days when local governments could covertly, and without effective judicial review, deny power and electricity to any firm that chose to integrate its workforce. Our brief pointed out the thriving market supplying services for same-sex marriages both in states that prohibit discrimination on grounds of sexual orientation and those that do not. A website called gayweddings.com lists 67 bakeries, many within easy walking distance of Masterpiece Cakeshop in Lakewood, Colorado, that service same-sex couples.
So the relevant trade-offs are clear. On the one side, allowing competitive markets to operate without Colorado’s antidiscrimination laws asks Craig and Mullins to go down the street to buy the wedding cake of their choice. But imposing CADA forces Phillips into a Hobson’s choice: either abandon your religious convictions or abandon your livelihood, leaving your own loyal customers in a lurch. Why this massive remedy for a minor harm? Surely it is not for dignitary reasons—given the humiliation and hostility often heaped on bakers like Jack Phillips, who are today’s “discrete and insular minorities.” Worse still, why should any legal system invite gay couples to refer fundamentalist Christian merchants to CADA by requesting a custom wedding cake, before moving on to the baker of their choice?
To bolster our case, our brief took issue with an influential 2013 study of the Michigan Department of Civil Rights that concluded that the antidiscrimination laws promoted economic growth by assuring all people that they will be served regardless of their sexual orientation. But that study misfires on multiple grounds. First, it does not explain how a minuscule fraction of refusals to serve could ever have any discernible effect on overall economic activity. In contrast, driving some merchants out of the market altogether might do more harm by creating a hostile business climate. Second, Colorado’s current antidiscrimination laws do not convert all bakers into public utilities who are subject to the FRAND standard. Under CADA, they can still refuse to do business with any Trump supporters or with opponents of same-sex marriage—but they are prohibited from refusing services on the grounds of sexual orientation, whether or not in connection with same-sex marriage. It is simply erroneous to insist that functioning markets require each and every firm to service each and every customer. Redundancy of firms allows parties to make superior matches based on idiosyncratic preferences.
Nonetheless, a group of behavioral economics scholars has signed onto a brief that challenges our theoretical and empirical claims. They insist that the new insights of behavioral economics refute the teachings of neoclassical economics. In their words, neoclassical economics falsely assumes “purely, rational, mathematical decision making,” which uses modes of analysis that “are often incomplete or artificially constrained and not reflective of the complexity of real-world situations.” But neoclassical economics does not make such assumptions. Quite the opposite, it embraces private decision-making in competitive markets precisely because it recognizes tastes are generally heterogeneous, foresight is often limited, and individual abilities to calculate and choose are generally imperfect. Given these impediments, minority or disfavored individuals can take advantage of market redundancy to do business with the subset of firms most favorably disposed to them. Thus, those firms that better serve various markets will survive while their less able rivals will fall to the wayside.
In this environment, moreover, the prospect of open entry—never mentioned in the behavioral economics brief—will encourage a sufficient number of merchants to target underserved sections of the market. The behavioral economics brief shows an ideological blindness when it assumes that the rigid totalitarianism of Jim Crow has its analogue today in the hostile social response to gay and lesbian weddings by, of all people, Jack Phillips. That outsized claim inexcusably ignores and trivializes the lynchings, lootings, and humiliations that turned the old South into a police state.
In our brief, we noted that a consumer “need only turn on his or her computer to gain full access to a rich array of services from willing merchants actively seeking their business”—and we list in a footnote many such sites. As a mark of true intellectual manipulation, though, the behavioral economics brief falsely reworks our argument to accuse us of “acknowledging that same-sex couples still find themselves resorting to lists of ‘gay-friendly’ businesses to avoid homophobic reactions from business owners, harassment, or worse.” How perverse! The full range of specialized religious and social websites on countless issues are not formed in response to the bigotry of others but for the simple reason that voluntary groups have the specialized knowledge and expertise to better serve their clientele. Let us hope that the Supreme Court will use Masterpiece Cakeshop to put an end to the deeply totalitarian applications of state antidiscrimination law on matters of sexual orientation.