Scott Sumner  

A bit freer today than yesterday

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This caught my eye:

The Supreme Court ruled Monday that a 66-year-old program that lets the government take raisins away from farmers to help reduce supply and boost market prices is unconstitutional.

In an 8-1 ruling, the justices said forcing raisin growers to give up part of their annual crop without full payment is an illegal confiscation of private property.

The ruling is a victory for California farmers Marvin and Laura Horne, who claimed they were losing money under a 1940s-era program they call outdated and ineffective. They were fined $695,000 for trying to get around the program.

A federal appeals court said the program was acceptable because the farmers benefited from higher market prices and didn't lose the entire value of their crop.


The part I liked best was the 8-1 vote. Any constitutional rights that are defended on 5-4 votes, along ideological lines, are quite fragile. They could easily be lost with a slight shift in the Court's make-up. An 8-1 vote suggests broad support for the right.

Brink Lindsey has a new Cato paper called "Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth", which identifies areas where we might be able to make progress on deregulation:

Despite today's polarized political atmosphere, it is possible to construct an ambitious and highly promising agenda of pro-growth policy reform that can command support across the ideological spectrum. Such an agenda would focus on policies whose primary effect is to inflate the incomes and wealth of the rich, the powerful, and the well-established by shielding them from market competition. A convenient label for these policies is "regressive regulation"--regulatory barriers to entry and competition that work to redistribute income and wealth up the socioeconomic scale. This paper identifies four major examples of regressive regulation: excessive monopoly privileges granted under copyright and patent law; restrictions on high-skilled immigration; protection of incumbent service providers under occupational licensing; and artificial scarcity created by land-use regulation.
As Tyler would say, "self-recommending."

Update: Commenter Yaakov added the following note:

Regretfully, however, this seems not to be an 8:1 ruling, but rather a 5:4 ruling on the usual political lines. The three liberal justices that concurred in part, concurred with the more obvious parts of the decision. They dissented, however, on the issue of whether the government can confiscate the grapes and give as compensation higher prices. If that would be allowed, government could confiscate just about anything and give some crazy explanation why you are better off not having the confiscated property. For example, they could probably confiscate your swimming pool and tell you that you are better off without it now having a lower risk of drowning or having skin cancer.
That's very unfortunate.

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CATEGORIES: Property Rights , Regulation




COMMENTS (11 to date)
JG writes:

Can they get rid of the program as a whole too? For all of the other crop dump schemes as well?

Yaakov writes:

Thanks for bringing this to our attention. Yes, we are a little bit freer today due to this decision.

Regretfully, however, this seems not to be an 8:1 ruling, but rather a 5:4 ruling on the usual political lines. The three liberal justices that concurred in part, concurred with the more obvious parts of the decision. They dissented, however, on the issue of whether the government can confiscate the grapes and give as compensation higher prices. If that would be allowed, government could confiscate just about anything and give some crazy explanation why you are better off not having the confiscated property. For example, they could probably confiscate your swimming pool and tell you that you are better off without it now having a lower risk of drowning or having skin cancer.

ColoComment writes:

I am struggling to understand the economics of this program. The ostensible explanation is that the government's (or, the Raisin Committee's) confiscation of partial raisin crops is for price support by reducing the supply of raisins in the commercial markets.
However, those confiscated raisins are not destroyed. They re-enter the market, albeit in limited fashion. The government, in the words of today's opinion, "sells them in noncompetitive markets, for example to exporters, federal agencies, or foreign governments; donates them to charitable causes; releases them to growers who agree to reduce their raisin production; or disposes of them by “any other means” consistent with the purposes of the raisin program."
So, the total raisin supply is NOT reduced; it simply is partially diverted to some preferred consumers, and sold to them at prices (some for free!) that undercut the growers' commercial "market" price(s).
If the growers were to sell ALL of their raisins into the commercial market, and those preferred consumers were required to pay true "market" prices for their raisins, would not both the growers and all consumers be better off?
What am I missing here?

Carl writes:
The program was authorized by a 1937 law that allows the U.S. Department of Agriculture to keep prices for raisins and other crops steady by helping to manage supply.

This is why I'm such a fan of sunset provisions in law-making.

Miguelito writes:

If a bit freer, it's a very little bit.

Roberts said the government could have restricted raisin sales by limiting production, which is how the vast majority of crops programs work.
khodge writes:

I noticed the split that Yaakov pointed out; nonetheless, it would be a huge win if it became a foot-in-the-door for dismantling New Deal legacy programs.

Better still would be a systematic approach driven by congress.

Scott Sumner writes:

Thanks for the info, Yaakov.

ColoComment, Good question.

Carl, I agree.

Khodge, Yes, Congress is the only long term solution here. Normally I oppose the courts getting too involved in second guessing Congress, but this law was such an obvious violation of the right to property.

Zeke writes:

The idea of in-kind benefits as compensation for a takings is appropriate. The issue is one of valuation.

3rdMoment writes:

So it appears the government can still prevent you from selling the raisins, or even from growing them in the first place. But now they are no longer allowed to physically seize them.

Seems like a hollow victory to me. It's still a post-Lochner world we live in.

Greego writes:
The justices ruled [the law] is unconstitutional because it allows federal officials to seize personal property from farmers without fully compensating them

...

Justice Sonia Sotomayor was the only dissenter. She said the program did not deprive the Hornes of all property rights, it just limited the amount of potential income they could earn from it.

Surely the program deprives the Hornes in all property rights in those raisins that were confiscated. The Hornes' property rights encompass not just the farm, vines, capital equipment etc., but all of the produce as well. Assuming the article's paraphrasing of it is accurate, this is a ridiculous justification for dissent.

J Mann writes:

It is astonishly depressing that this even reached the Supreme Court.

Leaving aside the question of whether the government taking your property constitutes a taking of property, why the heck is the federal government in the business of deciding how many raisins the market can bear? After 2 terms of Reagan, 2 Clinton, and 3 Bush terms, nobody ever managed to shut this destructive boondoggle down?

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