Bargaining With The State

Richard Epstein, Professor of Law at the University of Chicago, is intrigued in this book by the ways in which important liberties are threatened by legislative actions designed to distribute various benefits and favors to selected groups of people. As Epstein notes, “The conventional wisdom has it that government is subject to extensive limitation when it regulates and none when it contracts” ( p.312). But, Epstein warns, this simplistic attitude badly ignores the importance of limiting all of government’s activities. It is just as important to monitor bargaining by the state as it is the traditional forms of governmental power such as governmental takings, regulation and taxation.

When Epstein talks about “bargaining with the state,” he has in mind instances where the state distributes benefits through contracts, grants, licenses, tax exemptions and access to public property. His central thesis regarding such actions is that “The power to contract and to grant, when lodged in the hands of government may well prove to be as dangerous as the power to take and to regulate. A government that can tax, and hence take, at will should never be totally free in choosing the parties with whom it contracts and to whom it makes grants. And a government that has any level of monopoly power cannot be trusted to impose whatever conditions it wants on these same parties ” (312). Epstein argues through analyses of specific instances of case-law how the government’s indirect use of its monopolistic power can be as injurious to liberty as its more direct use of such powers of taxation and regulation. Every time individuals can preserve their liberty against the contractual power of government, advantages accrue both to the short-term interest of those individuals and to the long-term welfare of society as a whole.

When the benefits that the state awards to some people come with strings attached, red flags ought to be raised all over the land. Americans need to be more conscious of the ease with which they can be hanged by the strings that so often accompany government benefits.

In the early parts of his book, Epstein lays the necessary conceptual foundation for the legal analysis that follows. His analysis of bargains proceeds in a utilitarian way, since their supposed function is the advancement of some test of social welfare. He submits bargaining to two tests: does the bargain produce benefits for the contracting parties and does it respect the interests of persons who are not parties to the bargain? In these pages, the reader will find interesting treatments of such topics as competition, monopoly, forced exchanges and just compensation. Many readers will regrettably rush through these early philosophical discussions in order to get to Parts Three and Four where he covers such issues as public roads and highways, land use restrictions and the police power, licenses and permits, labor and employment contracts, and the complicated problems that arise from tax exemptions and unemployment, welfare and educational benefits. His discussions of the dangers implicit in the four types of benefits just identified often touch on issues that will be of interest to religious persons. For example, the infamous Bob Jones University case is an instance where government sought control over the internal operations of a religious institution by denying the college’s tax-exempt status because its religious convictions led it to reject interracial dating and marriage among its students. A sample of Epstein’s analysis of the Bob Jones case can serve as an illustration of the way he approaches other issues in the second half of his book.

“It is often said,” he writes, “that the general public should not be forced to subsidize institutions like Bob Jones University in their religious beliefs. But the argument has the subsidy claim backwards. Under Bob Jones, the University and its supporters are forced to bankroll in part the subsidies provided for other institutions, without receiving any parallel benefits of their own, thereby skewing the relative power of the two sets of institutions from what it would be in the tax-free world “ (251).

When government uses selective grounds like this in matters that impinge on religious beliefs and practice, we see government power at its most dangerous, Epstein contends. In such a context, “it becomes idle to say that the greater power to withhold tax exemptions includes the lesser power to condition an exemption on the sacrifice of the prospective recipient’s own religious convictions” (251). Regardless of what people think of Bob Jones’s beliefs and actions in the matter at hand, the University is nonetheless entitled, Epstein contends, to the same degree of constitutional protection as everyone else.

Epstein pursues similar concerns in his treatment of unemployment benefits, considering in the process the cases of a Seventh-Day Adventist who seeks unemployment benefits because he is fired for not working on Saturday and of a native American who loses a job for using peyote in a religious ceremony.

And then there is Roe V. Wade that creates the very real possibilities of a clash between the Supreme Court’s mandated right of women to an abortion and the religious convictions of people who believe that governmentally-funded abortions under Medicaid would coerce them into paying for an action that they regard as the murder of an unborn child. Epstein pursues the consequences of Roe V. Wade even further when he demonstrates how an outrageously bad law such as this produces equally pernicious repercussions through many subsequent laws.

Epstein’s book is clearly not for everyone. Its target audience is people in the legal profession and others interested in the philosophy of law, especially as reflection about legal philosophy interrelates with moral and religious concerns. But it ought also to be of interest to anyone concerned about the continued aggrandizement of state power.