Friday, October 25, 2013

Freedom vs. Compulsion: Bramwell vs. Roberts


Reading through the 1,092-page Oxford Book of English Prose as a respite from current events (published in 1925, it is little less  than an inch thick, and probably weighs less than two ounces), I came upon an essay by the Tory lexicographer, Samuel Johnson, and was struck by one of his comments. Writing in 1760, five years after completing his Dictionary of the English Language, about terminating his critical magazine, 'The Idler,' he noted:
Value is more frequently raised by scarcity than by use. That which lay neglected when it was common, rises in estimation as its quantity becomes less. We seldom learn the true want of what we have till it is discovered that we can have no more.*
What struck me was the appropriateness of Johnson's comment. Here in the U.S. we are losing our liberties by the dozen with each passing week. For over a century, a succession of administrations and Congresses have been carving them out and tossing them into a black hole. Most Americans today, having been raised in a mixed, regulated, welfare state economy, cannot imagine, much less claim to miss what they never knew: true, laissez-faire capitalism and a government that did not habitually prey on their freedom, wealth, and happiness. Those who took their liberties for granted are today now realizing the value of what is "no more."
Further on in the pocket-size volume, I encountered a startling legal opinion, delivered by British Lord Justice Bowen (Charles Synge Christopher) in the Court of Appeals in 1889 about a suit brought by a steamship company against an "association," claiming that the association engaged in a "conspiracy to injure" and so was guilty of "restraint of trade."**
We were told that competition ceases to be the lawful exercise of trade, and so to be a lawful excuse for what will harm another, if carried to a length which is not fair or reasonable. The offering of reduced rates by the defendants [McGregor & Gow.] in the present case is said to have been "unfair." This seems to assume that, apart from fraud, intimidation, molestation, or obstruction, of some other person right in rem or in personam, there is some nature standard of "fairness" or "reasonableness" (to be determined by the internal consciousness of judges and juries) beyond which competition ought not in law to go. There seems to be no authority, I think, with submission, that there is no sufficient reason for such a proposition.
It would impose a novel fetter upon trade. The defendants, we are told by the plaintiffs' counsel, might lawfully lower rates provided they did not lower them beyond a "fair freight," whatever that may mean. But where is it established that there is any such restriction upon commerce? And what is to be the definition of a "fair freight"? It is said that it ought to be a normal rate of freight, such as is reasonably remunerative to the shipowner. But over what period of time is the average of this reasonable remunerativeness to be calculated?....[U]ntil the present argument at the bar it may be doubted whether shipowners or merchants were ever deemed to be bound by law to conform to some imaginary "normal" standard of freights or prices…To attempt to limit English competition in this way would probably be as hopeless an endeavour as the experiment of King Canute. Law Reports. [Punctuation Americanized, Italics mine]
Justice Bowen found for McGregor & Gow and dismissed Mogul Steamship's suit. In short, he wrote that because force in any form had not been employed by the defendants against the Mogul Steamship Company, Mogul had no lawful grounds to claim "economic injury" or a plot by McGregor  & Gow to consciously injure Mogul. Note that he questions whether definitions of fair and reasonable would even be valid, possible or admissible, and that if any judge attempted to adjudicate such a case based on those terms, it would be wholly subjective and not objective (and likely open to appeal by McGregor & Gow.).
There were no American opinions excerpted in the volume that I could compare with Bowen's. But, intrigued by the case and Bowen's reasoning, I investigated Mogul Steamship vs. McGregor et al., and found that Bowen's opinion was upheld three years later, in 1892, by Lord Bramwell (George William Wilshere Bramwell ) in the House of Lords (acting as a kind of Supreme Court at that time), when the same case wended its way there on appeal by Mogul Steamship, with Bramwell echoing much the same logic and language as Bowen's.
Bramwell said:
My Lords, the plaintiffs in this case do not complain of any trespass, violence, force, fraud, or breach of contract, nor of any direct tort or violation of any right of the plaintiffs, like the case of firing to frighten birds from a decoy; nor of any act, the ultimate object of which was to injure the plaintiffs, having its origin in malice or ill-will to them. The plaintiffs admit that materially and morally they have been at liberty to do their best for themselves without any impediment by the defendants. But they say that the defendants have entered into an agreement in restraint of trade; an agreement, therefore, unlawful; an agreement, therefore, indictable, punishable; that the defendants have acted in conformity with that unlawful agreement, and thereby caused damage to the plaintiffs in respect of which they are entitled to bring, and bring this action….
It is to be remembered that it is for the plaintiffs to make out the case that the defendants have committed an indictable offence, not for the defendants to disprove it. There needs no argument to prove the negative. There are some observations to be made. It is admitted that there may be fair competition in trade, that two may offer to join and compete against a third. If so, what is the definition of “fair competition”? What is unfair that is neither forcible nor fraudulent? It does seem strange that to enforce freedom of trade, of action, the law should punish those who make a perfectly honest agreement with a belief that it is fairly required for their protection….[Italics mine]
Steady the Buffs. Bramwell saw no evidence of force being used against Mogul Steamship, nor any "conspiracy" to obstruct it from engaging in any trade whatsoever, and dismissed the hypothetical question of a "conspiracy" that would prevent the hypothetically "injured" from engaging in trade.
Further, he questioned the validity of a charge that the defendants, McGregor & Gow, had acted against "public policy," which ostensively prohibited "restraint of trade." He quotes another justice:      
"Certain kinds of contracts have been held void at Common Law on the ground of public policy; a branch of the law, however, which certainly should not be extended, as judges are more to be trusted as interpreters of the law than as expounders of what is called public policy." I think the present case is an illustration of the wisdom of these remarks. [Italics mine]
At the time, the idea of "public policy" had not yet ossified in political thinking. Today, "public policy" is a club used to beat the citizenry into submission and obedience. "Public policy" – that is, government policy – covers a virtually infinite number of actions and things, from smoking to consumer prices to stock trading to medical care to immigration. More on that issue later. Returning to the question at hand, Bramwell wrote:
See in this case the judgment of Lord Esher, that the plaintiffs might recover for “damages at large for future years.” Would a shipowner who had intended to send his ship to Shanghai, but desisted owing to the defendants' agreement, and on being told by them they would deal with him as they had with the plaintiffs, be entitled to maintain an action against the defendants? Why not? If yes, why not every shipowner who could say he had a ship fit for the trade, but was deterred from using it?....
The Master of the Rolls cites Sir William Erle, that “a combination to violate a private right in which the public has a sufficient interest is a crime, such violation being an actionable wrong.” True. Sir William Erle means that where the violation of a private right is an actionable wrong, a combination to violate it, if the public has a sufficient interest, is a crime. But in this case, I hold that there is no private right violated. His Lordship further says: “If one goes beyond the exercise of the course of trade, and does an act beyond what is the course of trade, in order—that is to say, with intent—to molest the other's free course of trade, he is not exercising his own freedom of a course of trade, he is not acting in but beyond the course of trade, and then it follows that his act is an unlawful obstruction of the other's right to a free course of trade, and if such obstruction causes damage to the other he is entitled to maintain an action for the wrong." I may be permitted to say that this is not very plain. I think it means that it is not in the course of trade for one trader to do acts the motive of which is to damage the trade of another. Whether I should agree depends on the meaning to be put on “course of trade” and “molest.” [Italics mine]
Where, Bramwell is asking, is the initiation of force? Where is the "molestation"?And, the whole notion of projected or "potential" losses incurred by someone not engaging in trade because of an external force – in this instance, a competitor's actions – was to Bramwell utterly inadmissible as grounds for charging McGregor & Gow with "restraining" trade. "Potential," reasoned Bramwell, was not the "actual."
But it is clear that the Master of the Rolls means conduct which would give a cause of action against an individual. He cites Sir William Erle in support of his proposition, who clearly is speaking of acts which would be actionable in an individual, and there is no such act here. The Master of the Rolls says the lowering of the freight far beyond a lowering for any purpose of trade was not an act done in the exercise of their own free right of trade, but for the purpose of interfering with the plaintiffs' right to a free course of trade; therefore a wrongful act as against the plaintiffs' right; and as injury to the plaintiffs followed, they had a right of action.
I cannot agree. If there were two shopkeepers in a village and one sold an article at cost price, not for profit therefore, but to attract customers or cause his rival to leave off selling the article only, it could not be said he was liable to an action. I cannot think that the defendants did more than they had a legal right to do. I adopt the vigorous language and opinion of Fry L.J.: “To draw a line between fair and unfair competition, between what is reasonable and unreasonable, passes the power of the courts."  It is a strong thing for the plaintiffs to complain of the very practices they wished to share in, and once did. [Italics mine]
Briefly, Bramwell as much as said that Mogul Steamship claimed to be able to somehow get inside the heads of McGregor & Gow. and see a conscious conspiracy to "injure" Mogul Steamship, when in fact McGregor & Gow. were simply acting freely in the course of regular business, with no intention of "molesting" Mogul or obstructing its ability to engage in trade. It had no ulterior motive. Clearly, neither Bowen nor Bramwell subscribed to the notion of "platonic competition," and doubtless would have regarded the notion of "hate crimes" beyond the pale of rationality. And, doubtless, neither of them would be allowed to sit on any British bench, nor on any in the U.S.
This brings us to Supreme Court Chief Justice John Roberts' bizarre opinion on the legality of the Patient Protection and Affordable Care Act of March 2010, or ObamaCare, and the question of "public policy."
President Barack Obama's "public policy" was to impose socialized medicine on the country by compelling Americans to buy health insurance (the "individual mandate"). To this end he had the help of much of Congress and numerous "public policy" advocates in the private sector. The official "launch" of ObamaCare on October 1st was fraught with too many technical issues to recount here. This is aside from the evil of the legislation and the exponentially catastrophic consequences of its implementation, among which will be the degradation of medical care in this country, a reduction in medical personnel who opt out of the system or simply retire, and the politicization of one's choices and life.
There are lawsuits challenging the legality of ObamaCare pending or already in the courts. Earlier court decisions on the unconstitutionality of Obamcare have been ignored or overturned or are winding their way up the judicial ladder to the Supreme Court, in addition to individual state actions to limit or oppose the ACA. The major current challenge is Halbig v. Sebelius, which has not yet reached the Supreme Court. It challenges the power of the federal government to cajole states through federal subsidies to establish "insurance exchanges," and also the power of the Internal Revenue Service to act as the primary "enforcer" of the individual mandate. 
Unfortunately, no lawsuit against ObamaCare is grounded on any moral argument, to wit, that compelling individuals to buy a product is plain-language force and a violation of his freedom of association and his volition, that is, to engage in trade and to choose or not to engage in that trade. Instead, most lawsuits are focusing on technical issues of policy agendas and the constitutionality of those technical issues. For example, the British Daily Mail, in its October 22nd article, "Bombshell: Federal judge suddenly green-lights lawsuit that could stop ObamaCare in its tracks," wrote, in highlighting the fact that the IRS is summarily violating provisions of the ACA that forbid the government from offering premium subsidies to states that refuse to establish exchanges:
The Affordable Care Act forbids the federal government from enforcing the law in any state that opted out of setting up its own health care exchange, according to a group of small businesses whose lawsuit got a key hearing Monday in federal court.
The Obama administration, according to their lawsuit, has ignored that language in the law, enforcing all of its provisions even in states where the federal government is operating the insurance marketplaces on the error-plagued Healthcare.gov website.
Thirty-six states chose not to set up their exchanges, a move that effectively froze Washington, D.C. out of the authority to pay subsidies and other pot-sweeteners to convince citizens in those states to buy medical insurance.
But the IRS overstepped its authority by paying subsidies in those states anyway, say the businesses and their lawyers.
The one court decision that left everyone breathless in anticipation, and then jaw-dropping stunned when it was delivered, was the Supreme Court decision that both upheld and struck down the constitutionality of ObamaCare. In the 5-4 decision of June 28th, 2012, Chief Justice John Roberts wrote the majority opinion in the matter of the National Federation of Business v. Sebelius Secretary of Health and Human Services et al. [sic, should be National Federation of Independent Business], opining, among other things:
CHIEF JUSTICE ROBERTS concluded in Part III-B that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable. The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government's alternative argument: that the mandate may be upheld as within Congress's power to "lay and collect Taxes." Art. I, §8, cl. 1. [Italics mine]
Much was made in the news media and by critics of the notion of interpreting the Commerce Clause as a means of forcing individuals to engage in trade. Force, to these interpreters, means regulation – which is not what the Founders meant. 
On one hand, Roberts invalidated Congress's power to force individuals to purchase health insurance. On the other hand, he upheld the power to tax as a means of compelling individuals to purchase the insurance under penalty of a tax. But, more of Roberts' "reasoning":
CHIEF JUSTICE ROBERTS concluded in Part III-A that the individual mandate is not a valid exercise of Congress's power under the Commerce Clause and the Necessary and Proper Clause. Pp. 16-30.(a) The Constitution grants Congress the power to "regulate Commerce." Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. This Court's precedent reflects this understanding: As expansive as this Court's cases construing the scope of the commerce power have been, they uniformly describe the power as reaching "activity." E.g., United States v. Lopez, 514 U. S. 549, 560. The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce.
The only way failure to purchase health insurance would "affect interstate commerce" would be to reflect an absence of demand for a ridiculously overpriced commodity. Roberts seems to catch his breath and backtracks to make sure everyone understands his "reasoning" and reservations.
The Framers knew the difference between doing something and doing nothing. They gave Congress the power to regulate commerce, not to compel it. Ignoring that distinction would undermine the principle that the Federal Government is a government of limited and enumerated powers. The individual mandate thus cannot be sustained under Congress's power to "regulate Commerce."
 This should be news to anyone concerned that the current Federal Government is not now one of limited and enumerated powers, and that most presidents and Congress for over a century have blithely ignored the distinction established by the Framers. Let's look at his conclusion again. After dealing with the Necessary and Proper Clause, Roberts concludes:
CHIEF JUSTICE ROBERTS concluded in Part III-B that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable. The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government's alternative argument: that the mandate may be upheld as within Congress's power to "lay and collect Taxes." Art. I, §8, cl. 1.
Let us not quibble. Whether one calls it a tax, or a penalty, or a fine, it is legalized extortion.
After the decision, President Obama proclaimed, "In this country, an accident or illness should not cause financial ruin for anyone." But now that many Americans have seen what "is in it," all they see is financial ruin.
The insurance companies that stand to "profit" most from the compulsory element of ObamaCare were listed by Forbes Magazine in its October 14th article, "Obamacare's Website Is Crashing Because It Doesn't Want You To Know How Costly Its Plans Are":
The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the percentage of uninsured, exchange-eligible Americans for whom their plans are available.
For the longest time, ever since the federal government began persecuting large companies, accusing them of taking advantage of "captive markets" and enacting the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914 (Pub.L. 63–212, 38 Stat. 730), enacted October 15, 1914, by seeking to prevent anticompetitive practices considered harmful to consumers (monopolies, cartels, and trusts). The Clayton Act specified particular prohibited conduct, the three-level enforcement scheme, the exemptions, and the remedial measures.
The U.S. Supreme Court has played a central role in establishing controls over success and legitimate business activities. The Court's role in sanctioning ObamaCare is just the latest episode.
What accounts for the difference between the honest, clear reasoning of British justices Bowen and Bramwell, and the evasive, pretzel-like rationalizations of our Chief Justice John Roberts? There is speculation that Roberts was pressured to cast the swing vote in favor of upholding ObamaCare. That is mere speculation, although, given the conduct of the Obama administration these five long, ghastly years, that is not too incredible an hypothesis. After all, the ACA is supposed to be the crowning achievement Obama's years in office. No level would be too low for him to stoop to resort to arm-twisting a Chief Justice.
Another explanation would be the corrosive miasma of big government and the welfare state, a corruption that encourages fabulous interpretations of the Constitution and its original intent and language. Still another explanation would be purblind fear of opposing an imaginary national consensus, or defying a reckless, ambitious politician in the White House.
Perhaps it was just a reluctance to challenge the philosophy that Americans are charges or wards of the state, with no guaranteed rights but the "right" or obligation to serve the public.
Whatever the explanation for Roberts' action, he missed an opportunity to make it his finest hour, and chose to make a decision that will live in infamy.
*Samuel Johnson, “The Last 'Idler'," in The Oxford Book of English Prose, ed. Sir Arthur Quiller-Couch. London: Oxford, Clarendon Press, 1925. p. 400.

**Ibid. Lord Justice Bowen, “Mogul Steamship Company v. McGregor Gow & Co.: Judgment," pp. 853-854.

1 comment:

Edward Cline said...

To C.L. Gammon re the radio interview: Here is a point I wish we'd had time to cover during the program. It's difficult for me to squeeze in so much information on the spur of the moment in so short a time slot, as I tried to do during the show.

While antitrust laws in this country (beginning with the Sherman Antitrust Law of 1890) were supposed to combat alleged "monopolies" that somehow created "captive markets," Obamacare would create an actual captive market in which no one (except politicians) would have the choice but to participate. It's participate, or be fined. Some big insurance companies were behind getting the ACA introduced in Congress and passed for the specific purpose of creating a captive market. No big corporation in the 19th century had that power. And if you read my Bramwell vs. Roberts Rule of Reason column on the bizarre "reasoning" of Roberts when he upheld Obamacare, you'll see what I mean. The Commerce Clause gives the federal government the power to "regulate" commerce (between the states), but doesn't say that Congress had the power to force anyone to participate in that commerce. (The Founders had a different conception of "regulate," which was to bring order out of taxing wars between the states.). Perhaps we can discuss this the next time I'm on your show, or you can discuss it yourself. In short, the government is opposed to "monopolies" except for its own actual monopolies (e.g., the Postal Service).