Last September, GOP vice presidential candidate Paul Ryan spoke at the Hillsdale College’s Kirby Center, a Washington, D.C. arm of the conservative institution that was founded under the leadership of Supreme Court spouse Virginia Thomas. The speech was delivered in commemoration of Constitution Day, and it provides a fairly substantial window into how he understands America’s most important document. Unfortunately, the speech also raises very real doubts about whether Mr. Ryan can distinguish the founders’ vision from his own. Ryan’s speech does not simply defend his laissez faire vision for the country, it suggests that this austere vision is mandated by the Constitution itself:
We can strengthen our defense of liberty if we remember to keep in mind those who are struggling to make ends meet. What makes our Constitution such an extraordinary document is that, in making the United States the freest civilization in history, the Founders guaranteed that it would become the most prosperous as well. The American system of limited government, low taxes, sound money, and the rule of law has done more to help the poor than any other economic system ever designed.
There’s great deal of radicalism tucked away in this seemingly high-minded speech. “Sound money” is often a code word for abandoning modern monetary policy and returning to the gold standard, but Ryan later makes clear that he really means that the Federal Reserve should abandon all efforts to reduce unemployment. Currently, the Federal Reserve has a dual mandate to control inflation and ensure unemployment does not spiral out of control. Ryan, however, concludes we must “refocus the Federal Reserve on price stability,” eliminating its obligation to assist the unemployed. He does not cite a single word of the Constitution to explain why he thinks the Founders mandated this result.
Similarly, the Constitution says absolutely nothing about “low taxes,” despite Ryan’s suggestion that his preferred tax policy is blessed by the Founders. The original Constitution placed no limits on the amount of federal taxes, although it did require “direct taxes” to be “apportioned among the several states.” The Sixteenth Amendment expanded this power even further, providing that the United States “shall have power to lay and collect taxes on incomes.” America can have a high income tax or a low income tax, and it can tax the people most able to afford it at a higher rate than the poor and the middle class. This choice is made by the American people’s representatives, not by the Constitution.
The most disturbing aspect of Ryan’s speech, however, is a seemingly innocuous claim that the “the enforcement of contracts” is protected by the “constitutional cornerstone of our free society.” The Constitution actually has very little to say about the subject of contracts. Although it provides fairly robust limits against state governments rescinding contracts between the government and a private party, the Constitution is mute on federal laws that impair contracts between private parties.
The reason for this should be obvious. Worker protection laws limit the kind of contractual arrangements employers can force upon their workers — a minimum wage law forbids contracts that pay workers less than a certain amount. Consumer protection laws limit the kind of contracts merchants and manufacturers can enter into with their customers — a product safety law might forbid companies from selling dangerous products. If the Constitution actually did shield contracts in the way Ryan suggests, nearly all laws protecting workers and consumers would be unconstitutional.
None of this is to say that contracts aren’t important to a vibrant economy. They obviously are, which is why every state’s common law ensures that most contracts will be enforced. But the price of economic progress is not leaving workers and consumers powerless against rapacious corporations. For much of its history, America has tried to strike an appropriate balance between enforcing ordinary contracts and forbidding exploitative ones.
But, of course, there was a very dark period in American history when the Supreme Court did embrace an entirely fabricated “right to contract” of the sort that Ryan seems to embrace. During this long-discredited era, laws protecting the rights of workers were treated as constitutionally suspect and frequently struck down. Ryan’s suggestions that the Constitution embodies his favorite economic theory raises very real concerns that he would return America to this unfortunate era — an era that culminated in the Great Depression — if given the opportunity to do so.
[HT: Josh Blackman]
An earlier version of this post omitted the word “federal” from the sentence explaining how the Constitution treats contracts between private parties.