Richard Epstein

About Richard Epstein

Known to students at the University of Chicago and NYU law schools as “the libertarian,” Richard Epstein has established himself as an expert in constitutional law, contracts, corporate law, real estate law, torts, labor law—and even Roman law. He is reputed to be more knowledgeable about Justinian’s Code than anyone since the Emperor Justinian himself. The Peter and Kirsten Bedford senior fellow at the Hoover Institution, Richard Epstein is the author of several books including, The Case Against the Employee Free Choice Act.

California’s War on Vaccine Skeptics

Richard Epstein
Richard Epstein
88
 

It is now approaching three years since the advent of COVID-19 in March 2020 provoked the most comprehensive and coercive response to a public health crisis that the United States has seen. From the earliest date, that policy has included lockdowns, social distancing, masking, and mRNA vaccines—all to stem the spread of the disease throughout the country. These tactics have long been opposed by many who think that more focused responses, which seek to isolate and protect the most vulnerable populations, offer a more tempered and effective response to the disease—a position well-expressed in the Great Barrington Declaration of October 4, 2020, which the conservative Brownstone Institute a year later observed “shattered the notion that there was a scientific consensus in favor of lockdowns.” Many other physicians have also expressed their uneasiness about COVID vaccine mandates, even as the federal government issued its own vaccine mandate in the employment context (it was struck down in January 2022 by the US Supreme Court in NFIB v. OSHA).

Nonetheless, public officials have continued to take strong exception to these dissenting voices. One recent piece of legislation in California, AB 2098, which took effect January 1, was written to allow California health officials to stifle dissent by revoking or suspending the licenses of those physicians who take issue with the official line of support for mRNA vaccines. The legislative findings relied explicitly on the work of the CDC and the FDA to conclude that “the risk of dying of COVID-19 for unvaccinated individuals is eleven times greater than for vaccinated individuals,” and that the spread of erroneous information “has weakened public confidence,” especially by licensed professions, thereby placing lives at risk. The payoff:

Section 2270—Dissemination of misinformation or disinformation related to the SARS-CoV-2 coronavirus, or “COVID-19,” designated unprofessional conduct.

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‘Home Equity Theft’ by the Tax Collector

Richard Epstein
Richard Epstein
169
 

Recently, the United States Supreme Court decided to hear the case of Tyler v. Hennepin County, whose factual history reads like a Greek legal tragedy. The story, as recounted in Reason magazine (where I first learned of the case), involves Geraldine Tyler, a 94-year-old woman who suffered from the all-too-common frailty of falling behind on her property taxes. At first, she owed only $2,300 in back taxes. As is common in most states, steep interest charges began to accrue the moment the debt was not paid. For Ms. Tyler, that meant her property debt plus hefty interest and fees mushroomed to $15,000 in a few years. Had the government been a private lender in the consumer market, government agencies including the Consumer Financial Protection Bureau would have explored ways to limit these exactions, for longstanding law governing mortgages holds that lenders may not just keep all the proceeds of foreclosure sales. Instead, private lenders may at most collect principal, interest, and fees, and they must return any sums in excess of that amount (the surplus or equity in the property) to the borrower.

In this context, however, Minnesota’s Hennepin County rejected that principle; it did not stop with the collection of the total debt. Instead, when the obligation had not been repaid, the county seized the property, sold it for $40,000, satisfied the $15,000 debt Ms. Tyler owed, and then pocketed the rest of the money. Ms. Tyler received nothing. No wonder Reason used the evocative term “home equity theft” to describe the transaction. Indeed, what happened to Ms. Tyler could happen to property owners in eleven other states—Oregon, Arizona, Colorado, Nebraska, South Dakota, Illinois, Alabama, New Jersey, New York, Massachusetts, and Maine. Fortunately, most states have recognized the punitive nature of these claims and have reverted to the rule applied to private mortgages, which returns the surplus to the borrower.

So the question then arises: just how was it that the Eighth Circuit sustained the practice that wiped out Ms. Tyler? The most dramatic sentence in its opinion reads: “Where state law recognizes no property interest in surplus proceeds from a tax-foreclosure sale conducted after adequate notice to the owner, there is no unconstitutional taking.” At this point in the analysis, it sounds as if the state may keep the surplus simply by announcing its intention to do so, at which point the taxpayer’s property interest vanishes. Put in this broad form, the constitutional protection afforded to private property becomes a complete sham, because it is always possible for a rapacious government to claim property by the declaration that it owns it.

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The Wealth Tax Is a Poor Idea

Richard Epstein
Richard Epstein
1711
 

Now that the Republicans have taken control of the House of Representatives, it has become crystal clear that there will be no federal wealth tax on high-net-worth individuals for at least the next two years. Unfortunately, as with so many bad policy proposals, the push for a wealth tax has instead generated renewed interest in blue states. California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington are considering introducing their own wealth taxes. Through joint effort, they hope to make it more difficult for wealthy individuals to flee high-tax states for more favorable jurisdictions. This strategy represents wishful thinking at its finest. If this quixotic endeavor should become law, it will only hasten the exodus of wealthy individuals from blue California and New York to red Florida and Texas.

Today’s aggressive progressives hope to stall that movement by imposing an exit tax on these would-be exiles. These efforts should evoke oppressive regimes like East Germany, which erected the Berlin Wall to keep malcontents at home. It will surely face a fierce constitutional attack, as our Constitution has long been understood to have created a nationwide free-trade zone. In the United States, goods, services—and individuals—can move easily across state lines to promote economic development and growth. An exit tax imposes an explicit barrier on that project and is likely to be struck down as an impermissible burden on interstate commerce, as it is a direct descendant of the taxes and regulations that Chief Justice John Marshall struck down in such notable cases as Gibbons v. Ogden (1824) and Brown v. Maryland (1827).

Ironically, the rosy revenue projections that wealth-tax supporters such as Emmanuel Saez and Gabriel Zucman made in 2021 for its revenue potential—starting in 2023—are now hopelessly out of date. Two years ago, at the height of the pandemic, billionaires accumulated capital at near-record rates. Now, potential gains from a wealth tax have fallen because of the enormous declines in wealth (toward greater income equality!) experienced by virtually all newly minted tech moguls. Elon Musk leads the pack, with capital losses of $115 billion in 2022 alone. He has good company in Jeff Bezos ($80 billion); Mark Zuckerberg ($78 billion); and Larry Page ($40 billion). In sum, the American billionaires lost $660 billion this past year, about one-third of the $2 trillion in losses worldwide. Nothing guarantees that they will recover those losses any time soon, if ever. Considering a hypothetical 3 percent wealth tax rate, close to $20 billion in domestic wealth-tax revenue disappeared in 2022; this number would be far higher if the wealth tax also reached foreigners.

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A Needed Check on Union Violence

Richard Epstein
Richard Epstein
11
 

Recently, American unions have pushed hard to increase their power in the employment market. Unions may strike and thereby shut down a reluctant firm to extract a favorable deal, and will often do so even though that strike action imposes economic losses on union members. But just how hard will unions press to get a strongly pro-union labor contract? Last week in Glacier Northwest v. International Brotherhood of Teamsters, the US Supreme Court heard oral argument on a case that will help answer that question.

In Glacier, the union and the employer were locked in protracted negotiations over a new contract. The company uses cement mixers to distribute its ready-mix product to its customers. Just as the contract was about to expire, union drivers, as part of a coordinated effort, took their loaded trucks on the road, only to return the trucks, still loaded, to the company headquarters moments after the contract expired. The drivers left the engines running to prevent the immediate hardening of their cargo. However, owing to the large number of nearly simultaneous truck returns, much of that cargo did harden, inflicting immediate property damage on the trucks. The two sides reached agreement on a new contract a week later, but the dispute over these losses lingered on. The parties disagree over whether the actions of these workers came within the protected strike practices under the National Labor Relations Act (NLRA). Employers must bear losses caused by strike practices that the NLRA protects, but employers may sue unions in state court in tort for deliberate physical injuries.

This distinction makes a substantial difference. State courts hear and decide cases far faster than the National Labor Relations Board does. More important, state courts can award substantial monetary damages against unions while the NLRB cannot. Given these institutional differences, the key cat-and-mouse game is whether the case goes first to the state court or to the NLRB. The traditional practice on sequencing the two proceedings was set out in the important 1959 labor case, San Diego Building Trades Council v. Garmon, which held that the plaintiff may bring a tort action right away, to which the defendant might plead that the case was “arguably” subject to the provisions of the NLRB as a defense. Upon the defendant pleading such a defense, the tort suit had to be discontinued. The Supreme Court in Garmon ruled that the NLRA required a state court to dismiss a tort suit alleging that a union wrongfully attempted to win a contract by picketing an employer’s place of business. Indeed, that lawsuit was blocked even though the NLRB declined jurisdiction over the case, and even though the state court wanted only to award damages rather than impose an injunction against the union. The coercive effect of damages could induce abandoning the very behavior that the injunction would have directly prohibited. The question in Glacier was whether this employer was caught by Garmon pre-emption.

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New York’s Impossible Housing Dream

Richard Epstein
Richard Epstein
86
 

On January 10, 2023, New York Governor Kathy Hochul delivered her State of the State address against a grim political backdrop. For the past several years, New York has led the nation in net population loss, losing more than 400,000 people over the past two years, with no sign that the exodus will abate in the near future. The question is: what should the Empire State do to stem those losses? Much of the governor’s answer is that the state should somehow construct, over the next ten years, some 800,000 housing units, including many affordable ones. Along with dreaming up these units, Hochul has taken aim at localities throughout the state where the issuing of local building permits lags far behind the rate in nearby states. At the same time, Hochul has been reluctant to extend protections against eviction, which also have strong progressive support within the state.

Will New York actually take steps that will stem the string of population losses? The outlook is cloudy at best. To Hochul’s credit, one of the first parts of her program takes a page out of the classical liberal playbook on land-use law by calling for a removal of obstacles to issuing building permits. As Hochul notes, “Between full-on bans of multi-family homes, and onerous zoning and approvals processes,” these restrictions “make it difficult—even impossible—to build new homes.” It’s easy to see why. Permit denials are rarely related to the prevention of nuisance-like behavior from new construction that could impose physical dangers on existing housing. Quite the opposite. Virtually all of these permit denials and zoning restrictions have a different agenda: they hope to maintain property values for incumbent homeowners by preventing the supply expansion that would lower housing costs. Sitting owners therefore know that if they stay, they will enjoy the added benefits from these artificially high values. But the restrictions in question need not keep them tied to the state. The owners have an alternative: to sell at artificially high prices and then depart to other, more desirable (low tax, low regulation) locations.

At no point is there any guarantee that increasing the rate at which permits are issued will reverse the flow of migration out of New York, as the purchasers of their homes will not necessarily be individuals who reside outside the state.

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A Rose-Colored View of a Damaged Economy

Richard Epstein
Richard Epstein
77
 

US Treasury Secretary Janet Yellen arrives at the European Council in Brussels, Belgium, July 12, 2021.

This past week Janet Yellen, President Biden’s treasury secretary, offered her rosy year-end evaluation of the economy in a Wall Street Journal opinion piece titled “Biden Has the Economy Back on Track.” Her account comes just as the stock market has turned in its weakest performance in years, with huge losses recorded by such tech stalwarts as Amazon, Google, and Meta. It should be no surprise that her op-ed generated more than 2,500 tart responses, which overwhelmingly condemned her for being out of sync with today’s basic economic facts. Sadly, her many critics have reason to assume that the anticipated continuation of Bidenomics into 2023 will probably make matters worse.

Yellen blames the challenges facing the United States on two forces beyond its control: the “once-in-a-century pandemic” and the brutal and lengthy war in Ukraine. However, while the pandemic and the Russo-Ukrainian war limit what can be done, Biden still had, and continues to have, many options to mitigate these harms. Yet in responding to these harms, almost invariably he has chosen the wrong course.

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Freedom of Speech vs. Antidiscrimination Laws

Richard Epstein
Richard Epstein
25
 

Lorie Smith of 303 Creative.

Last week, the United States Supreme Court held oral argument in 303 Creative v. Elenis. It now appears that the court’s conservative majority—over three very exasperated dissenters‚ Justices Elena Kagan, Sonia Sotomayor, and Ketanji Jackson—will at last put to rest one of the most divisive issues of our age: whether state public accommodation law can compel various suppliers of wedding services—web designers, cake bakers, photographers, and more—to provide services expressing support for same-sex marriage inconsistent with their personal and religious beliefs. At long last, the answer appears to be “no.”

The problem received an indecisive answer in Masterpiece Cakeshop v. Colorado Civil Rights Commission (2018), when Justice Anthony Kennedy issued a wishy-washy opinion that found that “a clear and impermissible hostility toward the sincere religious beliefs motivating his [proprietor Jack Phillips’s] objection” by a member of the state’s Civil Rights Commission tainted its judgment, and called for a rehearing of the case. That Delphic ruling left unaddressed whether a more circumspect Colorado commission could impose its will on future proprietors who refused to take certain jobs if it meant bearing a message with which they fundamentally disagreed.

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New York’s Dangerous Speech Overreach

Richard Epstein
Richard Epstein
164
 

On May 14, 2022, a white supremacist launched a deadly attack at a grocery store in Buffalo, New York, killing ten black people and wounding three others. New York Attorney General Letitia James issued a detailed report on October 18 that examined the incident. That report found abundant evidence that social media platforms had allowed the shooter to voice his hatreds in ways that led him to commit these atrocities. At no point did James try to bring legal action against the platforms, doubtless thinking that it would be hard to prove that complex causal connection in court or overcome potential First Amendment objections (which give explicit protection to white supremacists and other bigoted groups) to any such prosecution.

Instead, New York took a different path when it passed Section 394-CCC, effective as of December 3, 2022. That legislation targets not just extremist social media sites but all such platforms that host user-originated content. Thus, any social media network accessible in New York (which is all of them) now has a duty to ensure that its platform is not used “to vilify, humiliate, or incite violence” based on “race, color, religion, ethnicity, national origin, disability, sex, sexual orientation, gender identity, or gender
expression.” More concretely, each network must also create “a clear and easily accessible mechanism for individual users to report incidents of hateful conduct.” Once reported, the platform must explain to the reporting party “how the matter is being handled.” Any platform that “knowingly fails to comply with the requirements of this section shall be assessed a civil penalty for such violation by the attorney general not to exceed one thousand dollars.” Each day of noncompliance counts as a separate offense.

The due-process objections to this threadbare scheme could well prove fatal. The law sets out no criteria as to how the attorney general (and presumably her staff) shall assess multiple penalties, which in aggregate could run to many thousands of dollars against any particular platform. The attorney general has the power to “take proof,” to “determine” the relevant facts, and “to issue subpoenas in accordance with the civil practice law and rules.” The rights, if any, of the parties charged under this law to receive notice of the charge, present witnesses, or have a review by a neutral party are not set out.

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The Upside-Down Logic of Climate Reparations

Richard Epstein
Richard Epstein
55
 

High on the agenda of the climate activists who dominated the COP27 summit of two hundred nations at Sharm El-Sheikh, Egypt, was unanimous commitment to set up an extensive financial fund to support poorer nations whose economies have suffered “loss or damage” because of global warming. That money is slated to come from wealthier countries who have now accepted that their “excessive” use of carbon-intensive resources has caused massive economic dislocation in those poorer countries. Thus, the UN statement in part “urges developed country parties to urgently and significantly scale up their provision of climate finance, technology transfer, and capacity-building for adaptation so as to respond to the needs of developing country parties as part of a global effort” to address climate change. The actual amounts owed will have to be determined later.

Years of impassioned pleas for such climate reparations have laid the groundwork for this uniform display of Western remorse. One representative article from Foreign Policy estimated that the world is on track for “as much as a 5°C temperature increase,” a wildly high estimate. The idealized version of the claim runs as follows: “The world’s poorest will bear the worst consequences of the climate crisis. Redirecting international resources to address entrenched inequalities provides a way out.”

But does it?

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Green Delusions, Cold Realities

Richard Epstein
Richard Epstein
68
 

It is plain that Great Britain and Western Europe face a dogged energy crisis that could require planned blackouts and brownouts come winter. The explanation for this crisis does not lie in any unavailability of cheap energy sources that could easily be brought to market. It lies in the consensus among the political and scientific elites that these resources should not be used in order to block the allegedly dire side effects of their use.

The most recent chapter in this saga starts with the short-lived appointment of Liz Truss as British prime minister on September 6. Truss reversed the British ban on hydraulic fracturing for fossil fuels, or fracking, by permitting it in places where it had secured community consent. That policy shift provoked such an indignant response from both Conservative and Labour party members that it was promptly reversed by new prime minister Rishi Sunak on the assumption that fracking increases the risk of widespread damage from earth tremors.

The UK’s categorical judgment represents a terrible exercise in risk management. Vast improvements in fracking technology over the past dozen years have systematically reduced the environmental damage from fracking, with further improvements in store, for example, from techniques like waterless fracking. The comprehensive ban is overbroad, as it is possible to introduce targeted safeguards if and when needed to protect the most vulnerable locations while expanding energy supplies. Moreover, missing in the current decision to reinstate the ban is any recognition of the pending reduction in industrial production and the consequent increase in human suffering. Even environmental interests are put at heightened risk when desperate individuals and groups inevitably resort to other, less efficient, techniques to gain energy from burning wood or dirty coal.

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A Midterm That Matters

Richard Epstein
Richard Epstein
27
 

The midterm elections on November 8 are just two weeks away, and at this moment voters appear to be moving sharply towards Republicans, both at the federal and the state level. In New York State, Republican candidate Lee Zeldin has erased a six-point deficit. He is now in a dead heat with incumbent Kathy Hochul, who has run her campaign as if the right to abortion—already protected by statute in New York—is what matters to voters concerned with potential energy blackouts, immigration, crime, inflation, and high taxes. Democrats in federal elections have much the same mindset; they speak of the January 6 events at the Capitol in the present tense. But Donald Trump has been relatively quiet in this election cycle. He did give out occasional endorsements, but he has not made himself the center of attention. The Democrats thus root their message in the past while voters see the current elections as a referendum on the policies of the progressive Biden administration, which has only moved further left since January 2021, driving away many Democrats and independents.

There is no way to ignore problems on the Republican side of the aisle, such as the tribulations of Herschel Walker in Georgia and Mehmet Oz in Pennsylvania, for starters.  However, both their races have become competitive because the dominant issue everywhere is who will control the closely divided Senate, not the relative merits of individual nominees. The midterms are now framed as a referendum on the many divisive policies of the Biden administration.

The best place to start the analysis of Democrats’ decline is with their combination of energy and climate policy. The Democrats’ stated position is that the perils from global warming are so great that they require a rapid transition from fossil fuels to the so-called renewables—wind and solar. To achieve that end, the Democrats have attacked both the production and transportation of fossil fuels at both state and federal levels. The effort to shut down fracking on public lands has helped create a shortage in supply. This shortage is compounded by major European countries—Great Britain, France, Germany, Holland—by bans on fracking, which denies everyone reliable energy supplies for this coming winter. California simultaneously puts in place an electric-vehicle mandate for 2035 while warning today’s drivers not to charge their electronic cars at certain times to avoid overloading the power grid.

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Artistic Dispute Calls for a Solomonic Solution

Richard Epstein
Richard Epstein
44
 

This past week, the Supreme Court in Andy Warhol Foundation for the Visual Arts v. Lynn Goldsmith grappled with the difficult relationship between “derivative” and “transformative” uses of a copyrighted work in a high-stakes dispute between two industry heavyweights, each looking to land a knockout blow. The extended judicial dialogue did not reveal a clear winner—nor should it have. In such cases, where both parties contribute to a masterpiece, some division of the spoils is the voice of principled moderation.

In 1984, the noted photographer Lynn Goldsmith granted an “artist’s reference license” to Vanity Fair for the preparation of one rendition of the famed entertainer Prince to appear twice in its November 1984 issue. That license did not specify who that artist would be, and it only allowed the chosen artist to get inspiration from the photograph, not build off it. Vanity Fair picked the famed artist Andy Warhol, a.k.a. “Andy the Appropriator,” who is now best known for his imaginative recreations of photographs of Marilyn Monroe and Campbell’s soup cans. True to form, Warhol used the Goldsmith photograph as direct source and made not one but fifteen silkscreens, each with its own distinctive feature. Two pictures tell the tale:

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In Sackett Case, a Shallow Dive into ‘Wetlands’

Richard Epstein
Richard Epstein
2013
 

Last week, a thoroughly confused and grumpy Supreme Court heard oral arguments in Sackett v. EPA, which once again addressed the reach of government permitting power under the 1972 Clean Water Act.  In 2004, Michael and Chantell Sackett purchased a 0.63-acre lot in an Idaho housing subdivision, separated by three hundred feet from Priest Lake—a large, navigable body of water—by a major road and other homes. In 2007, the Sacketts applied for a building permit, which the Army Corps of Engineers denied on the grounds that their lot was properly classified as a wetland, which under the CWA meant the Sacketts were required first to get a permit from the Corps. The designation as a wetland came from a May 2008 Corps study by the EPA’s field ecologist, John Olson, which “observed that all portions of the Sackett property where native soil was removed but fill material had not been placed . . . were inundated or ponded/saturated to the surface.”

This legal tangle begins with a key coverage provision of the CWA:

(7) The term “navigable waters” means the waters of the United States, including the territorial seas.

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Fuel for Inflation

Richard Epstein
Richard Epstein
177
 

For financial markets, September 2022 was one of the worst on record. A nonstop bear market has been created by a decline in stock prices in excess of 20 percent, just as national output declines for the second straight quarter. These indicators point to a continuing recession. Inflation pressures have, as of now, brought the thirty-year fixed-rate mortgage to a 6.7 percent rate, up 1.5 percentage points in the past six weeks and double what it was in January 2022. The Federal Reserve has instituted a series of sharp rate increases to tame the inflation. But this remedy, even if justified, will drive down stock prices in the short run and, by raising the cost of capital, could well further dampen economic activity. Wages have risen in nominal terms, but well below the rate of inflation.

We are now past the point where any government response to monetary issues can reverse this downward trend. Instead, what is necessary is a hard look at the wide array of social and business policies that have led to the current malaise.

Recall for these purposes that the basic definition of inflation is too many dollars chasing too few goods. The rate of inflation does not depend solely on monetary issues within the Fed’s domain—it also depends on changes in the stock of goods and services. Sensible economic policies that aid growth will thus tend to curb inflation even with bad or capricious decisions by the Fed. But conversely, foolish economic and regulatory decisions will compound the problem by shrinking the economic pie in area after area; a key tenet of progressive thinking harbors the sorry illusion that if the Fed does its job, governments and businesses—often backed by government power—are free to pursue all sorts of collateral ends, most of which are counterproductive.

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Religious Liberty in the Dock

Richard Epstein
Richard Epstein
24
 

This past weekend, Yeshiva University took a dramatic step that many observers thought would never happen: it decided to suspend the operation of all undergraduate on-campus clubs indefinitely, rather than to accede to a June 2022 order from New York State Judge Lynn R. Kotler “to immediately grant plaintiff Pride Alliance the full and equal accommodations, advantages, facilities, and privileges afforded to all other student groups at Yeshiva University.” Judge Kotler issued the order after determining that Yeshiva was not a religious corporation under applicable New York law, and was thus subject to New York City Human Rights Law (NYCHRL), which makes it unlawful for a business in “all places of public accommodation” to discriminate against any person because of his or her “sexual orientation.”

For its part, Yeshiva had claimed the protected status as “a religious corporation incorporated under the education law,” given that it had always organized its undergraduate institution to that end. It did so even though one of its other divisions, namely Cardozo Law School, had, as its irate faculty had noted in a recent letter to Yeshiva President Rabbi Ari Berman, long given full recognition to LGBTQ+ individuals and organizations. But for Judge Kotler the key point was not what Yeshiva does today, but what it wrote about itself in 1967 when it expanded its charter from the study of Talmud to a wide range of Jewish and secular studies. This expansion, Judge Kotler explained, qualified Yeshiva as an “educational corporation under the Education Law of the State of New York.” In effect, Yeshiva was barred by its own fifty-five-year-old declaration from claiming a protected religious status today.

But why? By any functional account, the reasons New York City (like so many other government entities) created this religious exemption was to ease the nasty conflict between forced association under antidiscrimination laws and the exercise of religious liberty, as protected by the First Amendment. That conflict remains in place no matter what the state charter says. The underlying theory is that it is appropriate to impose a nondiscrimination rule when the various suspect attributes of a given person are irrelevant to any rational decision about the performance of the protected parties under statutes like NYCHRL, but that this logic does not cover activities that fall outside the public realm—such as the practice of religious education. That theory was given voice by Justice William Brennan in Roberts v. United States Jaycees (1984), when he ordered the Jaycees, a large men’s civic organization with many branches, to admit women. But, at the same time, Justice Brennan noted that the antidiscrimination laws were displaced by the principle of free association that covered “certain intimate human relations . . . in pursuit of a wide variety of political, social, economic, educational, religious and cultural ends.”

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California’s Fast-Food Fumble

Richard Epstein
Richard Epstein
128
 

On September 5, California Governor Gavin Newsom lent his hearty endorsement to California’s FAST Recovery Act (short for Fast Food Accountability and Standards Recovery Act), which has been widely praised—and chastised—for its intention to raise minimum wages for the industry from $15 to as much as $22 per hour, the highest in the nation, with further increases in the offing. The major discussion over this new law has been directed to the perennial question of whether the loss in employment from its adoption will more than offset the salary gains to the workers able to maintain their positions within the industry. That is not likely, in my view, given the huge jump in mandated wages, which will make for a difficult transition period.

In dealing with this peculiar calculus, moreover, the inevitable losses in industry profits are given little or no weight in the economic evaluation of the law, on the implicit assumption that while the wage increases may put a dent in firm earnings, they will not drive all fast-food providers into bankruptcy—high-end operations are likely to be better able to weather the storm. It is also assumed that any increase in prices passed on to consumers will be borne with good grace, though many customers of the fast-food industry have marginal wage and income profiles not all that different from the workers (or at least those who retain their jobs) inside the industry.

The common assumption is that the only recourse available to deal with this new threat to the industry is a referendum to overturn the law, which would require the collection and validation of 623,000 signatures by December 4, 2022, for the referendum to appear on the ballot. Such an effort would attempt to replicate the successful 2020 initiative Proposition 22, which was designed to exempt companies like Uber, Lyft, and DoorDash from a California law that reclassified their drivers as employees entitled to all sorts of protections not made available to independent contractors.

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Student Debt Cancellation Is Constitutionally Infirm

Richard Epstein
Richard Epstein
46
 

In one of the most audacious acts of his presidency, President Biden recently issued a fact sheet offering “Student Loan Relief for Borrowers Who Need It Most.” To Biden, that group consists of all individuals who have received student loans but have not yet paid them off, with an exception for loan payments made during the pandemic. The president wants to give this group “breathing room as they prepare to start repaying loans after the economic crisis brought on by the pandemic.” The terms of the proposed loan forgiveness program are clear: the Department of Education will allow for $20,000 in debt relief to Pell Grant recipients—undergraduates with exceptional financial needs—and $10,000 for other students, so long as their individual income is under $125,000 per year (or $250,000 for a married couple). The plan also makes a number of technical adjustments that cut repayment rates for future loans.

The equity of this program has been under fierce attack for forcing the impending financial shortfall on the shoulders of individuals who have already repaid their loans, blue-collar workers who never took out loans, and the general taxpayer who already faces heavy rates. And the burden is no small thing: the Wharton financial model projects that the cancellation program will cost over $500 billion, and could jump to over a trillion dollars depending on future regulations and practices on both existing and new loans.

One might expect that a program of this magnitude would receive extensive congressional discussion followed by legislative approval. One would be disappointed. Here, the president is proceeding by executive order, which he claims is authorized under the HEROES Act of 2003 (an acronym for The Higher Education Relief Opportunities for Students Act). Biden relied on an extensive memo by Christopher Schroeder, the head of the Office of Legal Counsel, an office within the Department of Justice that provides legal advice to the president and all executive branch agencies. The memo does not hold water. The key provision of the HEROES Act on which it relies reads:

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A Groundless Attack on Conservative Law Firms

Richard Epstein
Richard Epstein
75
 

A recent magazine section in the Sunday New York Times breathlessly announced the “untold story of Jones Day’s push to move American government and courts to the right.” Jones Day is a powerful and well-respected law firm. The author of this exposé is an investigative reporter, David Enrich, who draws this excerpt from his new book, Servants of the Damned: Giant Law Firms, Donald Trump, and the Corruption of Justice, whose lurid title all too well sums up his grandiose thesis. Enrich is not a lawyer, nor does he argue like one. Instead, his modus operandi is to merely assume that Donald Trump, any of his associates, and indeed any conservative cause deserve intense public condemnation.

Enrich wants to delegitimize Jones Day by turning the firm into an arch-villain. He hopes first to make Trump persona non grata, so that large corporate law firms will rid themselves of Trump loyalists and dissociate themselves from any conservative causes. In going after Jones Day, Enrich lurches into dangerous territory by branding it ethically improper, if not downright immoral, for individuals to defend causes with which Enrich disagrees. His ultimate objective is to neutralize conservative law firms, a goal toward which at least one giant law firm appears already to have moved. (Kirkland & Ellis parted ways with two of its most distinguished lawyers—Paul Clement and Erin Murphy—because of their successful and sound defense of gun rights in New York State Rifle & Pistol Association v. Bruen (2022).) It would be equally wrong to mount this kind of crusade against any left-wing firm that decided to defend any of President Joe Biden’s initiatives on immigration, student loans, foreign affairs, or climate change. On both sides, it is far better to argue a case on the merits than to cast aspersions on the people and causes with which you disagree.

Unfortunately, dismissive condescension is Enrich’s stock and trade, whether he directs his poisonous pen towards individuals or causes.

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A Stable Constitution for Unstable Times

Richard Epstein
Richard Epstein
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One of the most fundamental questions of political theory is deceptively simple: why have a constitution at all? The answer to this question should be easy, given the widespread adoption of written constitutions in recent years, even if their substantive provisions vary widely from country to country.

Regrettably, however, the success of constitutionalism is far from guaranteed if social conditions do not support limited government, which is why so many constitutions have very short half-lives. The most notable exception to this unhappy fate is the American Constitution of 1787—up and running, with many changes along the way, for 235 years. Its duration is not just happenstance, for it rests on a sound intuitive assessment of how governments should generally work. To understand why some constitutions work, consider the arguments against constitutional precommitments.

One argument for not having a constitution is that legislation is a better way to deal with social problems. The legislator never has to plan solutions far in advance of their implementation, and thus has better information about conditions on the ground that let a legislature use its commendable financial resources and expert staff to fashion a solution. Therefore, there is a knock-down argument that some legislation is always necessary, and that not all matters can be resolved by some combination of social norms and private agreements, although these two are essential components of any holistic solution of good government.

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The Workplace Gender Gap: Not So Puzzling

Richard Epstein
Richard Epstein
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Recently three staff writers for the Wall Street Journal—Melissa Korn, Lauren Weber, and Andrea Fuller—published a feature story that relied on federal wage data from 2015–16 to support this eye-catching proposition: “Data Show Gender Pay Gap Opens Early.” Early indeed: the article proposes that the wage gap between men and women emerges within workers’ first three years after graduation from college.

What is striking about the story is that it does not allege that the observed wage gap is a function of systematic discrimination by employers, either alone or in concert. Nor does it explain why these employers would want to hurt themselves by hiring weaker men instead of stronger women. Also left unexplained is how any lawsuits intended to rectify salary imbalance might fare in court under either the disparate treatment or disparate impact theories of liability routinely available under Title VII of the 1964 Civil Rights Act. Instead, the article makes its argument by pictorial innuendo. The opening illustration shows a male college graduate dressed in robes standing on a tall stack of ten gold coins, while his female compatriot stands on a short stack of only six gold coins—a visual depiction of wage inequality that requires rectification in the form of wage parity.

The article is surely correct in its report of the raw numbers showing these gaps in the labor market. There is, to be sure, a nagging question of whether any pre-COVID data set captures current market realities given that the Great Resignation “wreaked havoc on US labor markets.” Nonetheless, it still makes sense to concentrate on the long-term dynamics in labor markets that the Journal study purports to identify as labor markets slowly return to previous conditions.

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