The Law of One Price Does Not Hold
Felix Salmon on This Year's Winners--Wallison, Holtz-Eaken, Hennessy, and Thomas--of Stupidest Economists Alive

Delong Smackdown Watch: Health Care/Jason Kuznicki Edition

Jason writes:

Economic Commands are Different from Political Commands or Taxes: I don’t disagree in the least the Congress is permitted to regulate the health insurance industry. I think it should regulate that industry, that our Constitution permits it, and that Congress even has quite a bit of discretion about which regulations it may constitutionally adopt. What I do disagree with is the claim that health insurance regulation may include a direct command by Congress to individuals to buy a product or service from private providers. This crosses a line that hasn’t been crossed before. Other examples of direct commands to individuals all stem from far more explicit provisions of the Constitution, as for example with the military draft or compliance with the census.

The latter two are also distinguishable from the command to buy health insurance in another way. Both military service and the census are necessary to the functioning of the government.... They are political commands, made necessary by the fact that we have a government of a particular type and wish to keep it....

Commands set dangerous precedents, in ways that prohibitions do not.... [T]here are plenty of restrictions on the government written into the Constitution, but none of them are written from the understanding that the government otherwise has the plenary power to command us directly. The Constitution doesn’t contain restrictions on the power to command citizens — because that’s not a power Congress was supposed to have at all...

Two points:

First: May I say that I don't find a "command" to pay for the medical care I will receive by buying health insurance rather than trying to free-ride and get somebody else to pay for my treatment to be an infringement on my liberty at all, but rather part of the necessary scheme of regulation needed for the market to function well--like the government's "command" that I use honest scales. I am much more worried about the military draft in time of peace: it is not clear to me how congress's power to "raise and support armies" gets generalized to the power to command what Milton Friedman used to call "an army of slaves" absent the most dire and immediate military necessity, which we in this country have never seen since the days of Valley Forge.[1]

I am more worried about the census than I am about the health care individual mandate/tax.

Second: It is not a question of me "favoring" mercantilism. It is a question of whether the Constitution was in its origins a "mercantilist" document--whether Congress's power to regulate interstate commerce was originally thought to be a narrow or a broad one. (This is, I should add, a separate question from what a constitutional provision means to us now: the answer to that question requires that we understand why we have not amended it--and it is clear to me that if we had maintained a narrow reading of the commerce clause power we would have amended it in the 1930s.)

Me? I find my great-great uncle Abbott's argument in the 1931 American Economic Review that classical liberalism and laissez faire as we know it did not emerge and does not predate Nassau Senior and the anti-Corn Law League of the 1820s to be conclusive. And I also find Jefferson's "Embargo Act" in time of peace conclusive evidence as well that Congress's interstate economic regulation power was thought to be very broad.

And do note that the text of the Fifth Amendment strongly suggests that somebody thought that Congress's raw commerce clause power extended to eminent domain without compensation...


[1] Indeed, even Thomas Hobbes thought that his Leviathan's just powers did not extend to a military draft:

[A] man that is commanded as a soldier to fight against his enemy... may nevertheless in many cases refuse, without injustice; as when he substituteth a sufficient soldier in his place: for in this case he deserteth not the service of the Commonwealth. And there is allowance to be made for natural timorousness, not only to women... but also to men of feminine courage. When armies fight, there is on one side, or both, a running away; yet when they do it not out of treachery, but fear, they are not esteemed to do it unjustly, but dishonorably. For the same reason, to avoid battle is not injustice, but cowardice...

except in the case of the most dire necessity:

when the defence of the Commonwealth requireth at once the help of all that are able to bear arms, every one is obliged; because otherwise the institution of the Commonwealth... was in vain...

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