A Plea for Checks

– September 29, 2020 Reading Time: 5 minutes

By checks I don’t mean your (outdoor) dining bills or paper orders for the payment of money, I mean mechanisms for reducing the power of government, as in the phrase “checks and balances.”

Some checks, like the presidential veto, are as notorious as a certain deceased rapper and SCOTUS justice. While always assailed by critics, such checks are unlikely to be lost to time.

Other checks are almost as obscure as Big Pun* and Thomas Johnson** but arguably just as important as the veto in some instances. Ex parte Young doctrine, the result of a 1908 SCOTUS decision, is one example of a recently degraded but formerly important check. Politicians hated the standard interpretation of it because it decreased their power by leaving them personally subject to injunctive relief when they violated the Constitution. In the words of Justice Rehnquist in 1974, Ex parte Young turned the rights guaranteed to all Americans in the 14th Amendment into a “sword” rather than a “shield.” The prolonged lockdowns experienced this year would have been shorter and less traumatic if this sword had remained sharp enough to smote certain state governors and their sundry minions.

I have long lamented the erosion of checks in corporate and political governance but at every turn find myself stymied by partisans who like to implement checks against the other party but not against their own.

That is not how checks are supposed to work, at least not in a country purporting to uphold the Rule of Law. It seems that rather than rebuild checks for their own protection, leaders in both parties decided it was better to allow them to erode further and to seize and hold absolute (i.e., unchecked) power at the first opportunity. That makes perfectly good sense, iff one’s goal is power accretion as opposed to, say, rational policymaking.

Of course no partisan admits they want to grab power for its own sake, so they adhere to ideologies, or loose sets of beliefs about the way the world works. A complex reality gets reduced to a few simple ideas, repeated ad nauseam until the ideas themselves seem real to their ideological acolytes.

On the Right, “government” gets blamed for everything, even bad acts on the part of businesses, which conservatives seem to believe are just the tools of government, at least until they are liberated by Republican politicians.

We’ve all read Adam Smith so we know better! “People of the same trade seldom meet together, even for merriment and diversion,” Smith wrote almost 250 years ago, “but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” But if checks against such rent-seeking entrepreneurship have weakened in recent decades, as many believe, whose fault is that?

On the Left, “capitalism” gets blamed for everything, even bad acts on the part of governments, which progressives seem to believe are just the tools of capitalists, at least until they are liberated by Democratic politicians.

In fact, the Left is trying to implement the first stage of a Green New Deal under the guises of the heavily amended Senate bill 2657 and House bill 4447, which recently passed the House as “The Clean Energy Jobs and Innovation Act.” Those bills would do things like further subsidize various forms of Green energy, provide nonscientist citizens with more say on climate change policies, add “environmental justice” to the mission of every federal agency, and increase construction costs. But it is all okay, supporters say, because there is no way any special interest legislation has crept into 1,400 pages of proposed legal changes.

People who believe those bills, and other Green initiatives, will “help the environment” would do well to study the long history of government interference in environmental markets. Americans have long cherished wild spaces and paid dearly for access to them, some by risking their lives pushing the frontier West (and South and North), and some by keeping parts of the more densely populated East as wild as possible.

Some of the latter used the political process to establish “Green Belts” through zoning ordinances but others purchased land outright and deeded it to nonprofit corporations charged with keeping the lands pristine. The corporate form, after all, is about organizing people to achieve some common goal, be it green (money) or green (environment) or just about anything in between, and doing it cooperatively, not coercively.

The founders of the Troy Meadows Preserve in Morris County, New Jersey, just twenty miles from Times Square, for example, wanted to keep 1,400 acres of the finest freshwater wetlands in the Northeastern United States out of the grasp of developers. They succeeded, too, until the 1960s when the local government used its power of eminent domain to run a highway through it. With the founders’ purpose thus subverted, government officials and judges then saw no reason to prevent pipelines and sewer lines from crisscrossing the property. It still exists south of the confluence of I-80 and I-280 but, as Google Maps reveals, it remains scarred by power lines and drainage ditches.

The desiccation of Troy Meadows was not a case of paving paradise to put up a parking lot and a jumping hot spot (Joni Mitchell, “Big Yellow Taxi,” 1970); it was a case of a free, living, breathing tree and assorted wildlife “museum” established by private philanthropy being turned to partisan ends.

The losing attorney for the nonprofit, Francis McCarter (“The Case That Almost Was,” ABA Journal 54, 11 [Nov. 1968], 1,076-80) lamented that “the efforts of private enterprise” in land preservation would “wither and die” due to the decision. If you ever drive around the hellscape that is northern New Jersey, you can see for yourself that he was right, despite the efforts of nonprofits like the Great Swamp Watershed Association.

In fact, it is best not to blame most hellscapes on capitalism (whatever that is anyway). The notion that the government could simply seize vacant land “grew in an era when we were still fighting the wilderness,” the attorney wrote, “whereas now we are, belatedly, fighting for it.” Private enterprise was way ahead of the government on environmental issues, and still is.

Think of it this way: private organizations, whether for- or nonprofit, have to be ahead of the times in order to survive in a world of cutthroat competition. (Or cabal as Smith warned.) Politicians who are ahead of the times, or too far behind it, suffer at the polls. Therefore, their policy prescriptions are at best coincident indicators. To see what the future holds, look to businesses and nonprofits. They would be even further ahead if they did not have to constantly worry about meddling politicians coming up from behind.

*One of the most underrated rap artists of all time according to https://www.complex.com/music/2012/11/the-50-most-slept-on-rappers-of-all-time/.

**SCOTUS justice from August 1792 until January 1793, the shortest appointment on record.

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic Review, Business History Review, Independent Review, Journal of Private Enterprise, Review of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.