– September 29, 2020
commerce

News over the last several days of a rise in Covid-19 infections raised concerns regarding a “second wave” of coronavirus infections; and in turn about new rounds of lockdowns and other restrictive measures. One could be forgiven for wondering why if stay-in-place orders, interstate movement restrictions, and other such tyranny didn’t scare off or confuse the virus in the spring and summer, they would suddenly prove effective in the fall. 

There are fewer people to infect now than in early 2020 (owing to immunities), and the most vulnerable are – despite the tragic actions of governors in certain states early on – now better protected. Health professionals are also already implementing improved means of treating the afflicted. Yet nevertheless there are warnings about renewed restrictions on gatherings and other voluntary forms of social interaction. 

The American Institute for Economic Research has been covering the Covid-19 pandemic and the awful policy responses to it since late January. We have examined and discussed those nations which employed effective and ineffective disease mitigation strategies, the impact on financial markets and business more broadly, and the tremendous amounts of politicallymotivated dishonesty (and quibbling) which citizens in the US and beyond have been subject to. 

Bad science? AIER was there. Good science and scientists? We were there. 

Taking on technocrats? We sure did.

Questioning Monetary policy? Of course. Fiscal policy? Certainly. Opportunistic taxes? Indeed – I recently did. 

It certainly looks as if AIER has tackled every policy issue conceivably tied to, or resulting from, state handling of the coronavirus pandemic. And we have – almost.

The Constitution and Commerce

Rights, which are normative rules regarding what is allowed of or owed to citizens, are enshrined at certain levels. At the nation-state level they most frequently guarantee speech, exercise of religion, assembly, and other facets of life – however inevitably qualified. 

Rights, of course, are not given by states; they are not legal, but natural. As human beings, they exist axiomatically and cannot be taken away. Being subject to legal or regulatory strictures (and whether one adheres voluntarily or not) indicates the presence of an artificial imposition separating human beings from the fulfillment of their choices and their selected personal interactions.

Surely, for example, the lockdown (‘stay-at-home’) orders – originally put in place to “flatten the curve” but in some places having remained largely in effect since March or so – are unconstitutional, and it’s only a combination of fear, political maneuvering, and full dockets which have prevented their review. That’s certainly the assumption I’ve held since March or so: forcing people to stay home, impoverishing them and wrecking small businesses as well as introducing scores of other problems, clearly can’t be legal. It’s the sort of thing one would see in a notoriously (or newly) despotic regime, or briefly imposed during a sudden emergency

But that’s not the case. It’s important first to recall that early in the crisis most Americans polled favored lockdowns. That’s disappointing, but somewhat understandable given the high levels of uncertainty at the time regarding the lethality of Covid-19. One should also bear in mind that the lockdowns were consistently billed as brief (“two weeks”) but absolutely essential affairs: If many had known that by the end of September some areas would still be locked down even with excess deaths below precipice monthly averages, polls would likely have reported markedly different opinions.

The quarantine/public health authority derives from the police power (10th Amendment); although the Federal government can impose such, the primary responsibility lies with the states. A common complaint regarding those laws is that some are a century or more old, and have not been updated in the wake of improved scientific understanding of disease origins and transmission. According to some judges, it’s only when lockdowns strike at a narrowly-defined segment of society (such as specific types of businesses) or protected institutions (such as churches or synagogues) that they run afoul of Constitutional guidelines. And even then, the remedy could be to make the application more even-handed rather than striking it down in its entirety. 

Due Process challenges to public health measures – which is to say, arguing that certain fundamental human rights such as equal protection under the law and the presumption of innocence are violated – have mostly been unsuccessful. Unless “arbitrary, oppressive and unreasonable,” courts have been reluctant to interfere with their imposition. So too have Commerce Clause arguments, where in the case of Compagnie Francaise de Navigation à Vapeur v. Louisiana State Board of Health (1902),

[a] shipping company alleged that [an involuntary quarantine] interfered with interstate commerce, and thus was an unconstitutional violation of the Commerce Clause. The Court rejected this argument, holding that although the statute may have had an effect on commerce, it was not unconstitutional. In a subsequent case, the Court made clear that at least where Congress has not taken action, it is “well settled” that states may impose quarantines to prevent the spread of disease even though quarantines “affect interstate commerce.”

While these precedents are discouraging and the wide latitude for government action in the name of public health arguably dangerous to liberty, there have more recently been some successes: in particular in Pennsylvania and Florida. While in the latter case the lockdowns were lifted by executive order, U.S. District Judge William S. Stickman IV’s language in the Pennsylvania decision is worth citing: 

[T]he right of citizens to support themselves by engaging in a chosen occupation is deeply rooted in our nation’s legal and cultural history and has long been recognized as a component of the liberties protected by the Fourteenth Amendment. Over a century ago, the Supreme Court recognized that “[t]t requires no argument to show that the right to work for a living in the common occupation is of the essence of the personal freedom and opportunity that it was the purpose of the [Fourteenth] amendment to secure … The emphasis given to economic substantive due process … was considerably recalibrated and de-emphasized by the New Deal Supreme Court and later jurisprudence. Nevertheless, our Supreme Court has never repudiated the recognition that a citizen has the right to work for a living and pursue his or her chosen occupation. The Third Circuit has recognized “[t]he right to hold specific private employment and to follow a chosen profession free from unreasonable government interference comes from both the ‘liberty’ and the ‘property’ concepts of the Fifth and Fourteenth Amendments.” 

 And in summation, that

[T]here is no question that this country has faced, and will face, emergencies of every sort. But the solution to a national crisis can never be permitted to supersede the commitment to individual liberty that stands as the foundation of the American experiment. The Constitution cannot accept the concept of a “new normal” where the basic liberties of the people can be subordinated to open-ended emergency mitigation measures. Rather, the Constitution sets certain lines that may not be crossed, even in an emergency. 

There will, undoubtedly, be an appeal from the Governor’s office. And this ruling has already been denigrated as political in nature – as if in this hyper-politicized era, any isn’t. The very idea that both employment and the free association of consumers and producers in voluntary commercial interactions could become a so-called political football is frankly nightmarish. Indeed, the idea that the current lockdowns could serve as precedent in the future should be disconcerting for all but the most zealous germaphobe. 

America is long overdue for, applying Judge Stickman’s phraseology, a “considerable … re-emphasis” of “economic substantive due process.”

We Must Have Liberty, and We Shall Have It

In 1819, the Swiss-French political theorist Benjamin Constant delivered a speech entitled “The Liberty of the Ancients Compared with that of Moderns” (“De la liberté des Anciens comparée à celle des Modernes”), wherein he distinguishes between what he refers to as the old and the new liberty. In the wake of Napoleon’s second defeat and the end of the French republican endeavor, Constant expressed the notion that

among the ancients the individual, almost always sovereign on public affairs, was a slave in all his private relations. As a citizen, he decided on peace and war; as a private individual, he was constrained, watched and repressed in all his movements; as a member of the collective body, he interrogated, dismissed, beggared, exiled, or sentenced to death his magistrates and superiors; as a subject of the collective body he could himself be deprived of his status, stripped of his privileges, banished, put to death, by the discretionary will of the whole to which he belonged. 

While contrarily, 

Among the moderns … the individual, independent in his private life is, even in the freest of states, sovereign only in appearance. His sovereignty is restricted and almost always suspended. If, at fixed and rare intervals, in which he is again surrounded by precautions and obstacles, he exercises his sovereignty, it is always to renounce it. 

It’s difficult to see how anyone could argue with this: the source of American prosperity – of prosperity anywhere, in fact – is trade. Exchanging goods and services on a free and unfettered basis, privately or via competitive markets, is the linchpin of modernity. Commercial dealing emancipates the population, putting state authority itself into a state of relative submission while generating rising standards of living. 

When Constant wrote those words, the Industrial Revolution was still in something akin to adolescence, but its benefits – not only in rising wages, but in the life expectancy of children, rapidly expanding literacy, and falling prices for clothes and other consumer goods – were racing across Europe. Then, as now, private ownership of the means of production inspired a greater love and yearning for individual freedom. That in turn created a broadening social commitment to liberty among business owners, their employees and consumers alike, omitting only the interests of the unproductive class: politicians, the military, and their legions of court minions. 

As a result [of business and commerce], individual existence is less absorbed in political existence. Individuals carry their treasures far away; they take with them all the enjoyments of private life. Commerce has brought nations closer, it has given them customs and habits which are almost identical; the heads of states may be enemies: the peoples are compatriots. Let power therefore resign itself: we must have liberty and we shall have it … [T]he liberty we need is different than that of the ancients … [in which] the more time and energy man dedicated to the exercise of his political rights, the freer he thought himself[.]

…which, of course, he was not. 

The many-decades trend which witnessed rapidly rising standards of living among Americans alongside increasing detachment from political activity – lower voting turnout, political apathy, party alienation, etc. – is not coincidental, although it may be reversing.

Toward a Human Right to Commerce  

To the extent that the United Nations is representative of supranational government perspectives, a look at its positions on commerce – individual or multinational – is instructive. Of the few mentions across the entire UN website, the most extensive discussion involves ten principles which firms are expected to “incorporate … into [their] strategies, policies, and procedures.” The “Ten Principles of the UN Global Compact” include:

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2: make sure that they are not complicit in human rights abuses.

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

While some of these are quite prudent and justifiable as guidelines (setting aside the colossal arrogance of asserting a “basic responsibili[ty]” among hundreds of millions of individuals starting, managing, and working for private firms worldwide “to people and [the] planet”) there isn’t even a vague suggestion of reciprocal rights.  

Similarly, the Office of the High Commissioner of the United Nations Human Rights Council offers a nearly 100-page guide outlining “The Corporate Responsibility to Protect Human Rights,” which seems reasonable, yet no complementary human right to engage in commerce is so much as discussed. And on the website of the United Nations Social and Economic Council are lengthy discussions regarding “sustainable development,” the facilitation of “intergovernmental partnerships,” and so on. 

Nowhere is there a clearly-stated, fundamental commitment to strictly prohibit state interference in voluntary trade, whether that takes the form of small business in Africa, publicly-traded companies in South America, or international conglomerates.  

A Moral, Economic, and Social Imperative

The lockdowns in response to the Covid-19 pandemic have taught many lessons. One is that politicians either don’t understand, or care, about maintaining the integrity of the wellspring of prosperity: private commerce, rooted in individual liberty and private property rights. A second is that an enshrined, protected and inviolable right – a human right – to private commercial dealing, on whatever scale or basis it may take, can no longer be overlooked. 

If there is a palliative to be retrieved from the economic and social wreckage of tyrannical Covid-19 policies at home and/or abroad, it is this: the purposeful reversal of the political erosion of private property rights and the right of livelihood. And that turnabout should take the form of a long overdue, formal appanage: a primary and inalienable Human Right to Commerce.

Peter C. Earle

Peter C. Earle

Peter C. Earle is an economist and writer who joined AIER in 2018 and prior to that spent over 20 years as a trader and analyst in global financial markets on Wall Street. His research focuses on financial markets, monetary issues, and economic history. He has been quoted in the Wall Street Journal, Reuters, NPR, and in numerous other publications. Pete holds an MA in Applied Economics from American University, an MBA (Finance), and a BS in Engineering from the United States Military Academy at West Point. Follow him on Twitter.

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