“Civil government,” wrote Adam Smith in The Wealth of Nations, “ ... instituted for the security of property, is ... for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
In the last week, the Supreme Court has issued rulings against affirmative action in college admissions, against anti-discrimination laws and against a proposal to forgive student debt. Whether or not one agrees with these rulings, I think it is evident the Court is returning to the jurisprudence of the Lochner era. The protection of property owners over and against the interests of everyone else is on the ascendance once again.
During the Lochner era, from 1897-1937, the Supreme Court followed a kind of laissez-faire philosophy: myriad attempts of Federal and State legislatures to ameliorate challenges faced by the working class were struck down as a matter of routine. The era is named for a 1905 case in which the Court found unconstitutional a New York State law regulating the working hours of bakers because it violated “freedom of contract.” Many of the labor regulations we now take for granted, such as the minimum wage, the 40-hour work week, the provision of safe working conditions, and the right to organize, were rendered all but impossible by this reasoning.
It was only under President Franklin D. Roosevelt’s threat of expanding the court in 1937 that Justice Owen Roberts made the “switch in time that saved nine.” In a case involving a Washington state law setting a minimum wage for women, Roberts changed his formerly held opinions to side with justices sympathetic to the New Deal reforms championed by Roosevelt.
Although many Americans agree with the court the President’s proposal to forgive student loan debt was a case of executive overreach, we forgive other kinds of debts all the time through bankruptcy courts. For whatever reason, student debt cannot be cancelled, and for many Americans this means living under the strain of debt payments in perpetuity, unable to buy a house or obtain a good credit rating, even with a college degree and a good job. One can reasonably argue the merits of the case itself, but I think the relevant question here is “who benefits?”
Employers of college graduates, for one. If you hire someone in need of making substantial monthly payments, chances are that person will keep their head down and their mouth shut, so as not to interrupt their income. It means they can pay less and demand more. Other beneficiaries of the continuing student loan crisis include folks from affluent families able to pay for their college education up front. Without the burden of student debt, college graduates can find their way towards more rewarding work opportunities and stronger credit, among other advantages.
I think the other major decisions of this recent Supreme Court session follow similar reasoning. The people who will benefit from these rulings are wealthy, by and large, and drive our country towards greater economic inequality. And here Adam Smith is instructive, writing that the “disposition to admire ... the rich ... and to despise ... persons of poor and mean condition ... is ... the great and most universal cause of the corruption of our moral sentiments.”
Samuel Barbour is a local economics professor musing on all things topical, within our community and abroad. Questions and comments are fielded at newsroom@shawmedia.com.