Introduction

As Americans, we tend to think of equality before the law as the idea that everyone is equal in a courtroom. The word “law” conjures up thoughts of courtrooms and of our own unique history ranging from the American Revolution to the end of Jim Crow laws. Specifically, Americans view equal protection under the law as equality regardless of race or background. This means that the State cannot unjustly, unreasonably or arbitrarily discriminate between citizens. Regardless of natural characteristics, individuals cannot be treated as either inferior or superior to any other person in society. While the State may treat someone differently if he has been convicted of a crime, equality before the law implies that his ethnic, racial, social or religious background will not influence his treatment. Americans can expect the same standards of justice for everyone and hope that limited, constitutional government can help to achieve those aims. We believe that equality before the law extends beyond the racial issues which make headlines.

Certainly, great strides have been made in the area of equality before the law both in the United States and abroad. The United States outlawed slavery with the 13th Amendment in 1865. The 14th and 15th Amendments were passed to further ensure equality before the law. Plessy v. Ferguson (1896) was eventually overturned by Brown v Board of Education (1954). In India, rules segregating Indians from the English were abolished. The Indians removed the de jure rules regarding the caste system in their 1950 Constitution. South Africans ended apartheid in 1993 and included equal protections clauses in their 1994 interim Constitution and more recent 1997 Constitution.

There has been a long struggle to get rid of the worst types of inequality before the law: slavery, serfdom, the caste system, and apartheid. But equality before the law means more than mere de jure laws. True equality before the law implies more than the mere rules being equal.that The process itself must be fair. Even when we think of the process, we normally think of a set of rules. Yet, the desire to ensure that the law makes no distinction between groups that no one is excluded from jury pools or judgeships, is not enough. The institutional rules common to the American system, not only fail to discourage rent seeking, but they actually encourage this insidious and ubiquitous practice. Successful rent seeking means that some people are treated differently than others.

Two Typical Schools of Thought

Modern attempts to achieve equality before the law have dealt with more subtle issues. Consider racial equality, which tends to be the single largest issue concerning equality (though equality before the law with regards to income and wealth is important as well). There is a wide split between two major schools of thought concerning racial equality: procedural equality and substantive equality. The first, procedural equality grew out of Justice Harlan’s dissent in Plessey v. Ferguson. It stated that "ours is a colorblind Constitution"; in other words, the goal of the Reconstruction Amendments was to create a legal regime whereby government could not impose burden nor benefit on the basis of race. The outcome of this would be to take the government out of the race business altogether. This was the dominant strain of legal thought during the civil rights reforms of the 1960’s. Even the 1964 Civil Rights Act, which expanded the power of the federal government to monitor private action, was still an outgrowth of procedural equality.

The other major school of thought is the substantive equality school, which has been on the rise since the early 1970’s and is the motivating factor behind programs such as affirmative action. Substantive equality rejects the idea that procedural equality is sufficient to correct the historical disadvantage that African Americans and other social groups have. The basic notion is that if the group is far behind now because of both historic governmental practices and the functioning of the private sphere, then merely getting government out of the race business isn’t enough. Hysteresis is too powerful. To put everyone on a level playing field, we must have government act affirmatively to help dissipate those disadvantages that keep certain minority groups down. This view reads the 14th amendment as a bar to "invidious discrimination" rather than as a bar to any action based on race. As such, affirmative action programs which benefit minority groups would be constitutional, because they were not developed with the intent to weaken or harm any specific racial group.

The second or substantive equality school is dangerous not only because it provides a slippery slope argument but because it uses a variety of devious tools. These tools can be used for a variety programs that appear to be unrelated to the concept of equality before the law but in fact are designed treat different groups differently for the purpose of rent seeking. Various groups use the following concepts to rent seek: dispersed costs and concentrated benefits, rational ignorance, and institutional constraints.

Boundaries

There are of course boundary issues. Where does Procedural equality jibes quite nicely with the notion that no one’s right to equal protection should be impaired or otherwise put upon. By getting government out of the race game entirely, the Justice Harlan approach respects the boundaries of all citizens, regardless of racial identity. Note that this is rather similar to the libertarian position; by minimizing governmental action and involvement, we hope that market mechanisms will generate outcomes that put all races at the same level.

The substantive equality approach, however, ultimately has to deal with some sort of balancing between the equal protection rights of various groups. Despite the claim that only discrimination based on invidious intent violates one’s equal protection rights, most people would have to admit that a point could be reached where the secondary harms to a program like affirmative action would end up violating the equal protection rights of the majority. In other words, intent cannot be the sole criterion; some sort of effect test is present. The question then for the substantive equality people is "where is the line". Alas, there has been no principled position from the substantive equality camp that states "here and no farther", no limitation to what could be done in an attempt to balance the positions of various races in American society. Without such a principle, substantive equality can expand to the point where majoritarian politics ends it.

Rent Seeking is Detrimental to Equality Before the Law

If I were syndicated columnist Walter Williams, I would start this paragraph with something like, “Williams, have you lost your mind? Rent seeking isn’t related to economic freedom.” But I’m not Walter Williams, so I will merely tell you that rent seeking is directly related to the question of equality before the law. The purpose of rent seeking is to make sure that one group is favored over all other groups for the purpose of profit. Special interest groups are not rent seeking to improve the social welfare. They are rent seeking to make themselves better off. Unions want rules that prevent me from hiring non-union replacements. South Carolina textile manufacturers want to make sure that I am not able to purchase inexpensive clothing from abroad, while they import their manufacturing equipment. Tenants want to make sure that they are able to live in rent controlled housing while everyone else pays the market price for housing. Homeowners want to make sure that they can enjoy pristine views while owners of undeveloped land must pay the price.

When special interests go before lawmakers to ask for special assistance, they are in fact asking that they be unequal before the law. If I ask for a law requiring all coal burning utility companies to use scrubbers even though those scrubbers are unnecessary for low sulfur western coal, then I am really asking that all coal producers not be treated equally before the law. When eastern high sulfur coal producers in conjunction with environmental groups wanted scrubbers used on all coal, they raised the price of using eastern coal; but they reduced the relative price of eastern coal (Ackerman and Hassler 1981). Taxpayers got dirtier air and higher priced electricity because consumers were treated differently than Eastern coal producers by the law and by lawmakers.

Equality Before the Law is a Complement to Economic Freedom

“a condition of liberty in which all are allowed to use their knowledge for their purposes, restrained only by rules of just conduct of universal applications, is likely to produce for them the best conditions for achieving their aims;”
—Hayek 1973. pg 55.

Economic freedom encompasses a variety of criteria that relate to individuals’ abilities to discover what they are best at. Economic freedom means that people are free to do what they want with their labor and property. They can enter into contracts, keep the profits of their success and suffer the consequences of their failures. Equality before the law and economic freedom are complements. Special interest legislation affects people’s ability to enjoy economic freedom by legally treating people differently.

Property rights provide incentives to entrepreneurs to both allocate resources efficiently and create new wealth (Smith 1776). Without property rights neither of these will occur. Countries with secure property rights grow, while those that lack property rights stagnate (Post Colonial sub-Saharan Africa is but one example). Perhaps the clearest evidence of this is the strong correlation between economic growth and property protection as found in the economic freedom indices. Additional academic work including Krueger (1974) also points to the relationship between property rights and economic growth. More recent scholarly work by Easterly (2002) and de Soto (2003) keep reiterating that those countries that have economic freedom also have economic growth.

There is obviously a philosophical reason to want economic freedom. We want to be judged on our own merits. Freedom implies a choice between two or more options that we get to make (Mises 1966, pp 282-283.) But there are economic reasons as well. Countries that have economic freedom get economic growth. Economic growth leads to wide assortment of better quality of life indicators. Rich countries have lower infant mortality rates. Rich countries have longer life expectancy. People in rich countries are able to care more about the environment (Easterly 2002). People in rich countries do not sell their children into child prostitution (Wasserman 2000).

The Manner in Which Rent Seeking Occurs

It is this majoritarian politics that causes problems. Not merely the tyranny of the majority against the minority, but the Olsonian manner in which minorities can impose their will on majorities. While Article VII the Massachusetts Constitution of 1780 read:

“Government is instituted for the common good, for the protection, safety, prosperity, and happiness of the people, and not for the profit, honor, or private interest of any one man, family, or class of men...”

We find that in actuality rent seeking is common even when we have the separation of powers that was designed by the Federalists to prevent inequality before the law. The Cato Institute estimated that $86,226,000 worth of corporate welfare (Edwards and DeHaven 2002). Other types of rent seeking abound.

But how are special interest groups able to extort money from others when we are all seemingly equal before the law? How are groups able to either get direct subsidies from the government or more deviously write laws that provide that group with a special benefit? How are special interest groups able to overcome the power of the majority?

Madison thought that there would be a danger that the majority would treat the minority poorly, but hoped that there would be a large number of sects, minorities, and disparate interests. These groups would prevent a true majority from forming. Therefore special interest group legislation would be hindered. An alternative model suggests that rent seeking by special interest groups actually determines policy. In the simplest of rent seeking models (Tullock 1967 and Krueger1974) both voters and ideology are completely neglected. Interest groups pay legislators or regulators for monopoly rents. Stigler (1971), however, suggests that politicians care about two things: votes and money (See also Joskow and Noll 1981). Politicians then balance their love of both so that the marginal utility gained from each is equal. Moreover, Stigler points out that it is unlikely that any individual politician would actually be maximizing social welfare. Peltzman (1976) advances Stigler’s article by pointing out that it is not just voters and money but rather multiple groups of interest groups that are competing with money.

In early voting models including the work by the Federalists, voters are assumed to be completely rational and self interested. Any non-economic votes are the result of rational ignorance (Downs 1957). Brennan and Lomasky suggest, however, that voters often vote not purely based on their interests but on a mix of interests and ideology. Brennan and Lomasky suggest that voters often use the vote to express themselves. Since voters are both rationally ignorant and have bounded rationality, there is no reason to think that they would vote for the optimal policy. Instead voters are easily fooled by rhetoric and form a very weak constraint on special interest group politics. Congleton (1991) follows this trend and who points out that money is not only used to purchase lawmakers but also used to influence voters not by convincing voters that a particular policy is a good way to express themselves at the polling station with a vote for ideology or group affiliation.

One problem is that voters rarely see through the rhetoric in part because interest groups often use a Baptists and Bootleggers model (Yandle 1989). The name Baptists and Bootleggers refers to a time when Baptists lobbied for blue laws (laws restricting alcohol sales) for moral reasons and bootleggers supported blue laws for pecuniary reasons. In these cases the Baptists are the groups who want to use moral suasion to convince voters and the bootleggers are the ones who strictly rent seek for pecuniary reasons. When there is a moral or theoretical justification for rent seeking, voters are less likely to become incensed. Moral justification lends opacity to the process and rationally ignorant voters are simply unaware of the process.

Oddly, the rhetoric implies that voters might have been better off if they were unaware. By listening to rhetoric they get caught up in a moral justification for the rent seeking and continue to vote for politicians who enacted the law (Caplan 2002). Voters either don’t understand enough economics to know what is going on or they know that their individual vote does not matter. They are almost free to vote for the best sound bite.

When people ask for special favors or rent seek, they cloak their interest. Ironically, they often ask for more equality. Utility and manufacturing companies are notorious for this. They always want some special rule that will make the world more equal, but in fact will make the world less equal.

“What those people who ask for equality have in mind is always an increase in their own power to consume. In endorsing the principle of equality as a political postulate nobody wants to share his income with those who have less.”
— Mises 1966 pg 840.

What Can We Do?

Often it seems like the struggle for equality before the law is hopeless. It seems as if people simply don’t understand or don’t care about economic freedom and its effect on our equality before the law. The New York Times poked fun of people who believe in liberty and painted a picture of a horrible world where everyone has economic freedom. The photographer picked purposefully horrible pictures to show (Rosen 2005). But all is not lost. There are people on both sides of the political spectrum who understand the overall cost when we are not economically equal before the law.

Moreover, the idea that people vote based on affiliation and rhetoric means that people who favor liberty do have a weapon. The media may be liberal, but not all of it is. If we can match the rhetoric of the rent seekers, we might be able to make a real difference. The implication is that there is good work to be done, not white flags to be raised.

Conclusion

While Montesquieu and the framers of the American Constitution built on an English tradition of constitutional government to protect individuals and their right to equality before the law, it appears that there is still work to be done. There is still a great struggle to actually ensure that people are equal before the law. Many general principles are agreed upon, but the boundaries are not. While the issue of race comes up in the news, there is the non-newsworthy manner in which certain laws protect special interest groups as an insidious and ubiquitous type of rent seeking. This is an area that makes more of a difference. It is the unknown inequality before the law that is hindering the economy and both philosophically and economically wrong.

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