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."