How bad constitutional law leads to bad economic regulations

Each of these three statutory schemes—NBC, Skidmore, and the Chenery cases—involves conscious deviation from common-law schemes, without explaining why such novel liabilities should be imposed. At that point, the deadly cycle begins. The standardless rules lead to a massive delegation to administrative bodies, which are totally unconstrained in their statutory objectives. When the permissible ends become broad, the delegated authority cannot be effectively constrained on matters of means. The all-too-common pattern of judicial deference is far easier to maintain in a world that contains no fixed substantive commitment than a world in which these commitments bind. So if property rights become inherently fragile, if wage-and-hour regulations can be imposed at will, if ad hoc duties can be imposed on corporate actors, the world of voluntary markets becomes a more dangerous place.

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The post–New Deal approach offers no constraints on ends. It does not treat force or fraud as the necessary predicate of government intervention in the market. In trade regulation, this approach is as comfortable setting up the milk cartels in 1934’s Nebbia v. New York as it is in striking them down, even though from a social point of view, free competition always outperforms cartelization.

The great flaw of New Deal legislation is that it unleashed a new system of regulation in which the ends were, and are, illegitimate. Strike down these ends, and there is no reason to worry about the administrative enforcement of invalid statutes. Let those statutes be sustained, and a vast and untethered administrative state will be erected to ensure their enforcement. And so it is that the lax constitutional protection of individual rights nourishes the uncontrollable administrative state America has today.

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