A Confused Progressive Case Against Occupational Licensing Abuse

Zephyr Teachout, the left-wing Fordham law professor who
recently failed to defeat New York Gov. Andrew Cuomo in the state’s
Democratic primary, has an article at The Daily Beast

examining “one of the most important [Supreme Court] cases of
the year.” That case is North Carolina Board of Dental
Examiners v. Federal Trade Commission, in which the Court must
decide whether a state regulatory board’s anticompetitive actions
violate federal antitrust law.

The case arose after the North Carolina dental board began
sending cease-and-desist letters to non-dentists who were offering
teeth-whitening services. The problem is that six of the dental
board’s eight members are licensed practicing dentists who stand to
reap the economic benefits from restricting entry to the lucrative
teeth-whitening market. Put simply, the dental board
used public power on behalf of its own private gain.

To her credit, Teachout, a progressive, opposes the board’s
actions and comes out in favor of free-market competition in this
particular instance. This case, she writes, “could redefine the
degree to which companies can directly exercise political power”
and “force the Court to describe the appropriate relations between
private and public power.”

So far so good. But Teachout then missteps in her legal
analysis. The dental board might prevail, she worries, because
“there are few Louis Brandeis-type populists on the court, who see
antitrust and decentralized private power as the source of a
thriving economy and democracy.”

In fact, a Court packed with Brandeis-type justices would
virtually guarantee a win for the anticompetitive state board. Why?
Because Justice Louis Brandeis made his name in large part by
urging the courts to butt out of state economic affairs and to
allow lawmakers free rein to enact the very sort of
special-interest favoritism under dispute in this case.

Consider Brandeis’ famous 1932 dissent in New
State Ice Co. v. Liebmann. That case dealt with an
Oklahoma law which granted a handful of companies the exclusive
privilege to manufacture, sell, and distribute ice throughout the
state. According to the statute, any entrepreneur or firm that
wanted to enter the ice business had to first apply for permission
and provide “competent testimony and proof showing the necessity
for the manufacture, sale or distribution of ice” at all proposed
locations. Let’s just say that state regulators were in no great
hurry to let any upstart rivals compete with their own hand-picked,
state-sanctioned ice monopoly.

Yet according to Justice Brandeis, the state’s anticompetitive
actions posed no problems whatsoever. “It is one of the happy
incidents of the federal system,” Brandeis wrote, “that a single
courageous State may, if its citizens choose, serve as a
laboratory, and try novel social and economic experiments without
risk to the rest of the country.”

If progressives like Zephyr Teachout are serious about having
the Supreme Court police the proper limits “between private and
public power,” they need a better judicial hero than Louis
Brandeis. Might I suggest a more appropriate alternative? How about
conservative Justice George Sutherland, who wrote the majority
opinion in New State Ice Co. invalidating the
protectionist Oklahoma law (Sutherland also led the Supreme Court’s
opposition to various New Deal legislation). “In our constitutional
system,” Sutherland observed, “there are certain essentials of
liberty with which the state is not entitled to dispense in the
interests of experiments.”