June 25, 2010

What will Congress force you to buy next?

By What will Congress force you to buy next?

Author: Luke A. Wake

Pacific Legal Foundation is challenging the constitutionality of the recently enacted health care law, which requires every American to purchase health insurance. As I have explained in prior postings, the federal government has no power to require Americans to purchase any good or service. Unfortunately, our liberty to remain free from coerced commercial transactions is in peril, and we need to fight to protect our Constitution, which was originally intended to protect our right to be left alone.

Many Americans recognize the importance of this issue. We cherish our freedom, and we're saddened and fearful to see the federal government usurping our liberties. Yet, there has been little discussion over the practical implications of what Congress is doing when it mandates that we must purchase a good or service. I am worried that too many Americans think that, even if Congress had the power, the federal government would never actually force us to buy gym memberships, new computers, or new cars. But, perhaps they should think again.

We know that private actors will always seek to influence governmental decision makers to ensure that the law promotes their interests; James Madison warned about this in Federalist No. 10 when he explained the problem of faction. He was concerned that factions (i.e., special interest groups) would exert influence on the government, and would use the government to promote their own interests, while violating individual rights. This is exactly what has happened over the last century, since important Constitutional rules were ignored during the progressive era. When our constitutional protections are lost, our liberties stand unprotected from the winds of political expediency.

Public choice theory tells us that factions will often succeed in exerting influence upon governmental decision makers, especially when they have a large financial stake in the matter. Suppose an industry stands to gain or lose millions of dollars if Congress passes a particular law; the industry has a real incentive to lobby for or against the enactment of that law. If the industry stands to lose 10 million dollars, then it is likely to spend up to 10 million dollars lobbying against its enactment. Conversely, if the law would benefit the industry by 10 million dollars, then the industry would be likely to spend up to 10 million dollars lobbying for the law. 

Suppose that the auto industry determined that its profits would increase by 10 million dollars if every American purchased a new car every 5 years. We could then expect the auto industry to lobby Congress to require Americans to purchase new vehicles every 5 years. They could wage a PR war, by saying that “purchasing cars” was vital to America's economy and that it would ensure our vehicular safety. They could even tout the new proposed law as being environmentally friendly, because it would get “clunkers” off the road. They could rally support from the unions, and use them to exert political pressure as well, because it could guarantee work for the union members. They would be willing to do anything necessary to ensure the bill’s passage, spending up to 10 million dollars on the campaign.

Now, this new law would cost each of us a lot of money. Assume that it would cost each of us an extra $5,000 to get a new car. This may be a lot of money to us, but it’s nothing as compared to what the auto industry stands to gain (10 million dollars). So very few of us would actually spend $5,000 fighting against the bill, knowing that  the auto industry was already spending millions. Of course, it is possible that we could coordinate opposition to the bill, but there are significant costs associated with coordinating resistance to such legislation. Indeed, the time and energy costs (as well as the financial costs) will usually inhibit effective opposition to legislation backed by deep pockets and exorbitant PR campaigns. In the end, we can expect that the industry will eventually have its way, and the legislation will pass.

So if the federal government gets away with forcing Americans to buy health insurance, we can expect businesses and industries to begin encouraging Congress to require us to buy other goods and services. This will undoubtedly benefit them; indeed, they stand to profit from such laws. We can try fighting those battles in the political arena, but our liberties will be much more secure if we succeed in convincing the courts that Congress lacks the power to force us to buy anything.   

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