Monday, April 30, 2007

Law: commerce clause

what is "commerce"? This is the question plaguing the Supreme Ct's recent Lopez and Morrison decisions, which restricted Federal commerce power to areas which were commercial.

My intuition comes from economics, based on the idea of externalities. The founders drafted the commerce clause out of the concern that states would discriminate against one another, or pass bills in ways that passed the harmful effects of in-state actions to other states (trash dumping), or would be unable to regulate areas that spanned multiple states.

If we take that as the intuition, we may understand the phrase "commerce" to encompass areas that are especially suceptible to these interstate externalities. What is commerce, after all, but the movement of goods from point A to B. Once commodified, goods move freely, and it is pointless to say that this pair of shoes is produced for "in-state" consumption and the other is for "export" out of state. For fungible goods, at least, there is an intuition that there is a fundamental connection w/ interstate commerce.

Yet not all commerce is commerce. Consider four categories:
1. Fungible goods (commodities)
2. Unique goods (e.g. artwork)
3. Interstate services (e.g. Western Union)
4. Local services (e.g. Mama's pizza)

All four are "commercial", yet intuitively, not all four affect interstate commerce to the same degree - hence the intuition that the activity has to "substantially affect" interstate commerce. 2 & 4 seem inheriently local, to the point that it becomes questionable why the gov't has to regulate it. Yet that judgment line has been virtually obliterated thanks to the Wickard aggregation principle. Taken alone, Mama's pizza has no effect; taken "as a class", all the Mama's pizzas in the nation make a pretty big dent. Perhaps in the dough market.

So without the "substantial affect" test as a viable line, the burden shifts onto defining "commerce". Here, there is some intuition that, as an abstraction, most commerce - most exchanges in goods and services in today's internet, globalized marketplace - will have externality issues and require federal legislation.

Yet if "commerce" is only a shorthand for denoting a category that has externalities, there will inevitably be other activities - arguably non-commercial - that will nonetheless have interstate externalities and perhaps require Federal legislation. Should federal legislation touch these? Marijuana. Adoptions.

Is the solution to expand "commerce" broadly - anything that conceivably touches money? Or, as I believe, is the solution to make explicit the purpose of the commerce clause - the elimination of externalities - and regulation ONLY when those externalities are present, and to demand a stricter accountability for finding them.

Maybe it's saying the same thing as the doctrine already is. Just more honestly.

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