Buchanan v. Warley: markets vs. government and discrimination

This is the longer version (which will appear in IPR) that also appeared in the Courier-Journal (800 words) and Business First (600 words)... (Here's an article on lead lawyer Storey by Damon Root in Reason-- and then a similar story in Reason, celebrating the life and work of Philip Payton Jr.)

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This year is the 100^th anniversary of a key U.S. Supreme Court case on civil and economic rights, involving Louisville. Buchanan v. Warley (1917) overturned racial zoning ordinances in Louisville which prohibited whites selling and blacks buying homes in white-majority neighborhoods. (On November 29^th, the city dedicated a historical market at 37^th and Pflanz to commemorate this.)

The NAACP organized a test case to challenge the law. (Charles Buchanan was the plaintiff—a white real estate agent who wanted the law overturned as well.) In Rehabilitating Lochner, David Bernstein describes Kentucky’s case as “extraordinary” and “notable for its length and its blunt racism,” arguing that segregation was divinely ordained and that “negroes carry a blight with them wherever they go.” (80)

Moorfield Storey argued against Kentucky before the Supreme Court. He had been president of the American Bar Association and was the founding president of the NAACP for 20 years until his death in 1929. He was deeply opposed to American imperialism, a proponent of laissez-faire economics, and a strong civil rights advocate.

Storey invoked the 13^th Amendment (a civil rights argument) and the 14^th Amendment (an economic argument), but the Supreme Court decided on the basis of the latter. Storey had argued that the law reduced the value of Buchanan’s house because he could not sell to William Warley, an African-American. Thus, the ordinance was a “taking” which violated the 14th Amendment right not to be deprived of property without due process of law.

In particular, the Supreme Court focused on “freedom of contract.” For example, writing for the Court’s unanimous decision, Justice Day supported “the civil right of a white man to dispose of his property if he saw fit to do so to a person of color and of a colored person to make such disposition to a white person.” (81)

By the same standard, the Court had previously struck down workplace safety laws and minimum wages. This approach stemmed from Lochner v. New York (1905) where the Court overturned laws that restricted the number of hours workers could be employed at a bakery.

Such rights were not seen as unlimited; they were subject to reasonable government regulation—to serve a legitimate and demonstrable public health or safety purpose. But under Lochner and as followed in Buchanan, “unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract” violated the 14th Amendment. 

In light of Plessy v. Ferguson (1896), many legal scholars had argued that such laws restricted both races, and thus, were not discriminatory. Others rationalized government regulation to “prevent race conflict.” Buchanan was a key part of the Court’s move to oppose those interpretations. “In short, Buchanan helped to repudiate Plessy’s presumption that segregation laws…are reasonable.” (82)

At the time, other cities were considering or implementing their own residential segregation plans; Buchanan stopped those particular schemes. W.E.B. DuBois said it should be credited with "the breaking of the backbone of segregation." And it also helped to protect Chinese-Americans from racist policies in California.

Bernstein’s book focuses on the influence of Lochner as a pivotal court case, but he devotes an eight-page section to Buchanan and its impact. “Buchanan was an extremely significant case. While it did not lead to a rollback of Jim Crow legislation, the decision inhibited state and local governments from passing more pervasive and brutal segregation laws akin to those enacted in South Africa.” (82) He also notes that African-Americans lost 22 of 28 cases on the 14^th Amendment before 1868 and 1910, but won 25 of 27 cases from 1920 to 1943 (84).

As Bernstein notes, “Giving Buchanan its due does not absolve the Supreme Court of its acquiescence to Jim Crow in other contexts.” (85) Likewise, “Liberty of contract supporters among the legal elite did not often distinguish themselves as advocates for African-American rights. But at least, unlike their Progressive adversaries, their skepticism of statism and their support for constitutional protection for property and contract rights provided one of the few counterweights to overwhelming expert and public opinion that segregation was good social policy.” (85-86)

This sort of racism is deeply troubling today, but was quite acceptable at the time of Buchanan—with the emergence of Evolution, the popularity of “race science,” and a Progressive passion to use government activism to pursue “progress”. Unfortunately, given the prevalence of racism, advocates for segregation found ways around the Buchanan ruling.

Many cities ignored the rulings, differing their laws slightly to avoid direct comparisons with the Supreme Court decision. Other cities respected Buchanan as law, but used zoning by income class (e.g., single-family homes) to reach similar results. This was a catalyst for professionalized zoning efforts which had been rare before World War I.

For example, city officials would change an area’s zoning from residential to industrial if too many African-Americans moved in. They allowed taverns, liquor stores, nightclubs, and brothels in African-American neighborhoods, while prohibiting them in white areas. They allowed houses in industrial areas to be subdivided, leading to the prevalence of apartments and rooming houses.

In The Color of Law, Richard Rothstein provides a useful history of government discrimination against African-Americans in the housing market. When the Federal Housing Administration (FHA) later promoted mortgages and home ownership, banks and the FHA made African-Americans ineligible since the neighboring businesses weren’t good for housing values—a form of de facto segregation. The FHA wouldn’t even insure a project if there were too many African-Americans living nearby.

Rothstein argues that the Lochner-influenced reasoning of the Supreme Court was one of the few anti-segregation forces of that time, dampening racial abuse by the government. (In Only One Place of Redress, Bernstein argues the same with respect to labor markets.) But the Supreme Court eventually repudiated its Lochner phase, allowing increasing restrictions on what could be done with property and leading the way to massive, federal economic interventions in the 1930s.

In this context, the courts made zoning laws—and their use to oppress African-Americans—more palatable. Communities used “deed clauses,” “restrictive covenants,” and community association by-laws—with explicitly racist provisions—to some effect. Eventually, the Supreme Court would again explicitly restrict discrimination in buying and selling property—with Jones v. Mayer in 1968—this time, under the 13^th Amendment as a Civil Rights ruling.

In Civil Rights in the Gateway to the South, Tracy K'Meyer describes such matters for Louisville from 1945 to 1980. She notes that, as a border city, Louisville would have been expected to have relatively good record, compared to the South. But being a border city also gave Louisville a greater opportunity to rationalize lesser gains and cover for whatever civil rights sins it had. 

On housing, K’Meyer tells the story of the Wades and the Bradens. In 1954, the Carl and Anne Braden bought a house in a white neighborhood in Shively and signed over the deed to the Wades. Despite the violence and threats of their opponents, the only arrest was Andrew Wade and a friend for “breach of the peace,” when the friend showed up without first notifying the police. Carl Braden was charged with sedition and sentenced to 15 years, but the verdict was overturned on appeal.

Segregated neighborhoods have historically been seen as de facto thru market preferences: consumers in tandem with realtors and banks. As such, “white flight” and economic decline often resulted in a chicken/egg downward spiral for neighborhoods. Rothstein says that this theory has “some truth, but it remains a small part of the truth” within a far larger one: until the last quarter of the 20^th century, many cities had “racially explicit policies” with bureaucratic enforcement. These laws were systematic and forceful enough that the racial outcomes are better considered de jure—by law and public policy.

All of this reminds me of Walter Williams' terrific point about Apartheid in South Africa. Anecdotal discrimination is annoying, but it results in modest segregation, as each side largely avoids the other. With moderate levels of discrimination, it's common for separate (and often thriving) markets to arise. Unless discrimination is complete, you'll find some mixing, from people who don't care about race all that much. And that was the role of the law in this context—to enforce the majority (racist) view on people who didn't hold racist views—to prohibit them from engaging in trade and other activities with those of other races. 

One of the beauties of markets is that people engage in mutually beneficial trade. Competition and an interest in greater personal well-being generally encourage people to work with each other cooperatively. But the law can be used to enforce racism and other views by force. History teaches us to be wary of such efforts.

mandatory licensing and pumping your own gas

Maybe you’ve heard about the recent firestorm in Oregon. People there are now being allowed to pump their own gas in the state’s less-populous counties. Some Oregonians are worried about their ability to do it safely or they don’t want the smell of gasoline on their hands.

Of course, markets will continue to provide full-service gasoline stations if enough Oregonians want to continue paying for the service. But industry interest groups and a handful of concerned citizens are trying to stop the deregulation. They’re supporting an effort to have Oregon’s government re-regulate an activity that is legal in 48 other states. (New Jersey has been the only other exception.)

Requirements to have professionals pumping gas is an example of “mandatory licensing” — where you are mandated by the government to have a license to perform a service. Often, market participants will pursue certifications, diplomas and credentials to signal their value in the marketplace. But “mandatory” takes it to another level — where the government insists that legal participation in those markets must pass muster with government regulators.

The Institute for Justice (IJ) has just released the second edition of its publication on this topic, “License to Work: A National Study of Burdens from Occupational Licensing.” (Full disclosure: Kyle Sweetland, one of the co-authors, is a former student of mine at Indiana University Southeast.) In the book, the authors note that 5 percent of workers required permission from the government to work in a field in the 1950s. Today, it’s about 25 percent.

The authors document the regulatory burden for 102 “lower-income occupations” in each state. The average cost is $267, one exam and nearly a year of education and experience. Fields in the cosmetology trades are the subject of consistent and large-scale regulations. But examples abound, ranging from interior design to pest control, from preschool teachers to massage therapists, from painters to auctioneers.

Such regulations are particularly unjust for members of the military who have the relevant training from the federal government — but often don’t pass muster with state accrediting bodies — to work in those fields legally.

As the IJ authors note, the regulations are not consistent by state. This implies that workers and consumers in non-regulated states are able to work things out well enough, without the government’s help. And often the regulations don’t seem to make much sense: On average, cosmetologists require more than a year of training, but emergency medical technicians (EMT’s) require about a month.

Indiana is one of the least-regulated states, regulating only 37 of the 102 occupations. (The average is 54.) Here, the most regulated occupations are midwife, preschool teacher and sign-language interpreter. Midwives are required to have three years of education and to perform 80 deliveries — the most stringent requirements in the 41 states where it’s legal. (Of neighboring states, midwives are prohibited Kentucky and Illinois.) Preschool teachers need six years of education and three exams. Interpreters must be at least 18 years old and have four years of training.

Compared with other states, Indiana is particularly stringent on truck and transit-bus drivers, ranking fourth highest. They are required to have a year of experience and to pass four or five exams. Indiana also has relatively high barriers for school-bus drivers (12th highest), skin care specialists (12th) and manicurists (15th).

In general terms, the effects of mandatory licensing are easy to imagine and predict: higher barriers to entry lead to fewer service providers and less competition; workers have less access to relatively easy-to-enter occupations; and consumers will face higher prices and a mixed bag in terms of quality (fewer providers but hopefully more qualified).

Until the last few years, this was mostly an issue of concern for Libertarians and labor economists. Libertarians were bothered by the ethical and practical implications of the government restrictions. Labor economists pointed to the costs of policies that are usually sold solely on their benefits.

But in 2015, the Obama administration devoted considerable time and energy to the topic, releasing a report “documenting problems with licensing policy and calling for widespread reform.” President Donald Trump’s Labor Secretary, Alexander Acosta, also has exhorted the states to address this topic. The Bureau of Labor Statistics is now collecting data on these policies and the Federal Trade Commission has created an “Economic Liberty Task Force.”

This bipartisan effort makes sense since mandatory licensing is not a partisan issue. It’s more about those who are politically connected (the political 1 percent) versus the general public in their efforts to restrict competition from other producers and their desire to increase prices and profits.

...you might be a partisan (in the style of Jeff Foxworthy)

This was fun to write (although frustrating to experience)! Here's a similar effort from Barton Hinkle on being used a Russian troll bot.
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Everyone seems to agree that partisanship is increasingly prevalent and toxic. But few people seem to see themselves as part of the problem. One aspect of partisanship can be a troubling lack of objectivity and empathy — and, even, blindness. So, how would we know if we’re partisans?

We all know that, at least in principle, it’s challenging to be objective. Think of a referee’s call in a sporting event between rival teams. Fans of one team get upset, confident that their team has been ripped off. Fans of the other team see the same call and are confident that the referees are correct. But then it all reverses two minutes later.

The problem: a lack of objectivity and blindness fueled by partisanship toward one’s favorite team. We can see it in others. But can we see it in ourselves?

Of course, favoring one “team” or another is not the problem. It’s the potential for bias and blindness that can easily come along with it. The stakes in politics are much higher — as they feed into society and culture, as well as public policy.

Looking at the low level of discourse in politics these days, it seems obvious that less partisanship would be really helpful. To those who are relatively objective on politics, it’s patently obvious that there’s plenty of room for criticism of both major political parties.

So, as a public service announcement, I’d like to help people see whether they’re political partisans. And I want to help non-partisans effectively signal their lack of partisanship. To do so, I’m going to borrow from Jeff Foxworthy’s famous riff of “you might be a redneck.” In this context, if you X, Y, and Z, then you might be a partisan if . . .

• You typically pull the party line lever in the voting booth.
• You’re only concerned with federal spending, deficits and debt when the other party is in control.
• Your Facebook posts on politics are not balanced between the parties.
• You’re passionate about Senate procedural rules and the pace of judicial appointments.
• Most of your examples of partisanship mysteriously implicate only one party.
• Wars and domestic spying are bad, but only when the other party is in control.
• Character counts, but only when the other party is in the White House.
• Your opinion of James Comey and Steve Bannon vary drastically with the news of the day.
• Everyone on the other side is stupid or evil (or you imagine that your group is pure of heart).
• You were a big fan of only Bush II or Obama on the many issues on which they agreed.

What should you do? First, if you’re a big fan of either team, then your standards are probably too low. Consider the possibility that both aren’t all that impressive. Quit being so nasty, dogmatic and team-centered, defending something that is indefensible. Recognize that most players on both teams are striving for power and let’s call them all to something (far) greater.

Second, try to focus on public policy more than party — and on principles more than personalities. It would be difficult to get educated on a large range of issues but make an effort to learn deeply about one or two issues. Read widely (instead of just from your own tribe) and have lunch with someone who is doing likewise. Try to figure out how the world actually works, rather than relying on a shallow approach to politics and policy.

Third, look in the mirror. It’s always easier to point fingers and attack others. It’s always tempting to rationalize, ignore our own flaws and make excuses. This has been a struggle for all of us since Genesis 3. But you can’t make progress, really, unless you’re willing to be introspective personally and to call out the yahoos in your own tribe.

Frank Turek and the (so-called) "problem of evil"

I really enjoyed Frank Turek's talk on Christian apologetics two weeks ago at IU Southeast. It was well-organized, funny, fast-paced, informative, chippy but respectful, wide-ranging, etc. If you get the op to see him in action-- Christian, deist, agnostic, skeptic-- I'd recommend him highly. (Here's another post with some other details on the talk.)

I was just thinking again this AM about a cool point that was new to me-- that "evil" proves the existence of God. The claim that something is evil *requires* a notion of the good and standards of good/evil and justice/injustice-- which then point to something transcendent. (This is a version of the flip side of a famous coin: if believers have a problem with "the problem of evil", then non-believers have a problem with "the problem of good.")

So, the more important question is why God allows evil to exist as much as it does. (The fancy word for this is "theodicy".) My favorite answers to this are: 1.) slippery slope (on the evil spectrum of A-Z, if God got rid of S and T, then Q and R would look really evil-- by definition-- and one would continue to question God on this; 2.) Matthew West's song "Do Something"; and 3.) we usually want God to allow evil to exist when *we* generate it, but not when others do!

miscellany from Brooks' Bobos

Brooks alludes to “assortative mating” and the drops in transaction costs that changed the way people met, married and had families (14, 25-29). (This is reminiscent of some of Murray’s work in Coming Apart.)

Brooks doesn’t mention Tom Wolfe, aside from a passing poke at the white vest which was part of his “audiovisual signature.” (173) But I kept thinking of Wolfe’s work on culture over the years—from… and… to…

Brooks makes smart use of “wedding data” from the New York Times (34, 43b) to compare the 1950s, 1960s/1970s, and the 1990s—the sheer number (many, fewer, many) and what we’re told about the bride and groom in the announcements.

Brooks cites Daniel Bell’s influence through his famous 1976 book on capitalism and culture (136-137) and points to Jane Jacobs’ 1961 classic, The Death and Life of Great American Cities as “the most influential book on how Bobos view organizations and social structure.” (123-127, 130)

nuggets from Turek

A lot of great reminders and new nuggets from Frank Turek last night at IUS. (You can catch him at U of L tonight.)

-Despite conventional wisdom, Mt 7 is about how to judge, not a (nonsensical) prohibition on judging. See also: Jn 7:24. 

-He likes to ask atheists: "If Christianity is true, would you believe it?" And they often reply no!

-The blurb on Big Bang is funny/revealing. 

-His argument that the existence of "evil" points to the existence of God. Evil only exists in light of the good, which points to the creator of the good. And injustice implies justice-- and a standard beyond us. (Turek allowed that the question of allowing evil is important but a separate topic. I develop both of these points in a separate post.)

-The emphasis on "embarrassing stories" in the NT which greatly enhance its credibility. He mentioned Peter being called Satan and fearful men vs. courageous women as witnesses at the tomb.

on free trade vs. protectionism

A few thoughts:

-It's generally a good thing to expand opportunities for voluntary, mutually-beneficial trade.

-We impose trade restrictions when we're trying to harm other parties-- e.g., boycotts, blockades, embargos, sanctions. So, when we impose restrictions on ourselves, we're imposing net costs on ourselves.

-If other countries impose costs on themselves, it's not wisdom to kick ourselves in the shorts.

-If trade restrictions are a net good for our country, then they should be good for Kentucky...and Jefferson County...and...

-There are a handful of non-economic arguments for restricting trade-- most notably, national defense-- where we might accept economic inefficiency to reach other policy goals.

-The most common arguments are to protect jobs-- and it may be a good thing to help a few folks, but only if it's understood that the restrictions necessarily shrink the economic pie overall.

-We can see that arguments for protectionism are oversold in that "free trade agreements" are hundreds or thousands of pages long. A true "free trade agreement" would take a paragraph or two. The length implies that interest groups are able to wield legislation in their favor in a decidedly non-free manner.

losing weight

This is the 2nd time I've purposed to lose weight. 1st time was South Beach's No Carb, dropping 20 pounds quickly (and only getting it back gradually over many years).

This time, I'm going with Low Carb-- nothing sweet, rarely eating after dinner, careful with carbs and portions; and mack to my modest workouts (lifting weights 2-4x/week for 30 minutes). Down 11 pounds after January. I have 9-19 pounds to go, I think.

Glad to be blessed with a body that deals with weight-- and glad that cause/effect is working well. On to February!

theory and data on K-12-- and Waiting for Superman

Theory and data tell us that entities with tremendous monopoly power are likely to be far less effective for society. Theory and data tell us to be concerned about govt-run entities. Data on K-12 performance are quite unimpressive. (But there are confounding factors-- most notably, the massive problems with family structure and stability-- as greatly subsidized by govt for the past 50 years.)

With all of that, here's what I find most under-rated and compelling: if you're in the second tier of any public high school, your classes reduce to baby-sitting. No homework, low expectations. The result: those kids, if they go to college, still need remedial math (Algebra I in many cases) and English.

Waiting for Superman is terrific on this entire topic. And my last point is covered in the movie's last vignette. If you haven't seen it yet, do it soon!

on the timing of the FISA-abuse memo

It's easy to imagine nefarious motives or politically-motivated concerns from both major political parties with the release of the FISA-abuse memo-- especially on the part of those who want to hide it. And it's easy to imagine honorable and nefarious motives within the FBI as they express their deep concerns.

I don't follow this stuff closely: Is the timing of the release strange, given Gowdy's announcement not to run again? (Is he connected at all?)

Politically, I think I would have waited until next week, to take fuller advantage of the post-SOTU address glow-- a yuuge victory handed to Trump by the Democrats, given their strategy of hyperbole and apocalypse. 

One more (cool, provocative) thought: Liberals couldn't support Clinton or Trump in 2016. If the FISA-abuse memo turns out to be what's claimed, then liberals would have a profound reason to be happy that Trump ended up winning. 

two problems with GDP

I'd rate GDP slightly lower than the poverty rate-- in the contest for worst statistical proxy for a key economic/social concept.

GDP "wins" for many reasons. In my Micro classes, we just covered "consumer surplus"-- the (sometimes immense) value that consumers receive *above* price. Since GDP proxies "value" *with* price, it necessarily (and drastically) underestimates (true) value.

This article implies another: ignoring the social/economic value of work in the home. Think of it this way: if 20% of double-income families decided to have one person stay home to spend more time with kids and the household, GDP would plummet, but those people would be doing it to improve their lives.