Competition’s Good For Raisin Farmers, and For Employees as Well


Congress should reexamine raisin marketing law

U.S. Supreme Court justices who agree about few controversial issues concur that the federal law purporting to “help’ raisin farmers like Marvin Horne by forcing them to hand over to bureaucrats a substantial share of their crop every year is foolish and counterproductive, if not unconstitutional. Unfortunately, laws similarly curtailing the economic liberty of employees have up to now received far more sympathetic receptions in federal courts. Image:

During the Great Depression, the U.S. Congress enacted many laws intended to foster economic recovery by restricting marketplace competition.  Today there is a wide consensus among historians, economists, and political scientists, including many who support the New Deal on the whole, that these anti-competition statutes were ill-advised and counterproductive.

At a U.S. Supreme Court hearing this March, a California raisin farmer and his wife challenged efforts by the U.S. Department of Agriculture (USDA) to collect accumulated bills and fine them for having refused for years to fork over a portion of their crop. The hearing illustrated the extent to which the New Deal crusade against “cutthroat competition”  has been discredited by time and experience.

For years, raisin farmers Marvin and Laura Horne have been openly defying a so-called “agriculture marketing order” authorized by the Agricultural Marketing Agreement Act (AMAA) of 1937.  As Reason Magazine’s Hit-and-Run blog contributor Zach Weissmueller pointed out in a post last week, the order for the Hornes’ produce is established by an “elected board of bureaucrats” known as the Raisin Administrative Committee (RAC).

Based on the estimated size of the U.S. raisin crop in any given year, the RAC orders every farmer to surrender a portion of his or her crop.  The confiscated raisins are taken out of the commercial domestic market.  The principal avowed goal of this program is to prevent “overproduction” that could drive down raisin prices.  Foreign sales of the raisins also raise money for domestic advertising campaigns promoting unbranded raisins.

Liberal Justice Stephen Breyer, as quoted by the Washington Post in an editorial regarding Horne v. USDA (see the link above), exclaimed at the hearing on the case this spring, “I can’t believe Congress wanted the taxpayers to pay for a program that’s going to mean they have to pay higher prices.”  Conservative Justice Antonin Scalia compared the RAC to a highway robber barking at the Hornes, “Your raisins or your life”!

After hearing the case, the nine justices unanimously found that the U.S. Court of the Appeals for the 9th Circuit had wrongly refused to consider the Hornes’ claim that the AMAA as implemented by the RAC is an unconstitutional violation of their Fifth Amendment rights.  The High Court remanded the case back to the 9th Circuit, ordering it to rule on the question of whether or not the confiscation of the Hornes’ crop with insufficient or even no reimbursement amounted to a taking of their property without due process of law.

Americans of all political stripes are likely to agree the Supreme Court did the right thing in Horne v. USDA and hope that the 9th Circuit finds that such crop confiscations are unconstitutional when it reconsiders the case.

Unfortunately, at this time there is no judicial relief in sight for employees whose economic rights are trampled by monopolistic unionism in a way that is remarkably similar to the impact of the AMAA and the RAC on the Hornes.  Just as the AMAA empowers elected bureaucrats to confiscate raisins from farmers in order to prevent “too many” of them from being sold in the America private-sector marketplace, the National Labor Relations Act (NLRA) and the Railway Labor Act (RLA) empower elected union officials to impose productivity-quashing work rules on union members and nonmembers alike.  The aim of such work rules, in many cases, is to “protect” workers’ jobs by preventing them from producing too much, just as the RAC aims to keep raisin prices high by deterring farmers from growing too many.

Moreover, under the NLRA and the RLA, workers who may or may not think they benefit from work rules that keep them from being “excessively” productive are forced to fork over dues or fees to the union acting as their “exclusive” bargaining agent, just as the Hornes have been ordered to turn over a share of their raisins to the RAC’s agents.

The actual intent of the NLRA, as some of the sponsors of the 1935 law openly admitted, was to raise prices and thus enable employers to pay workers more.  Hence, what Justice Breyer found so shocking about the AMAA as implemented is also true of the NLRA (and the RLA), by design.

Unfortunately, up to now courts have been unwilling to consider arguments that federal labor laws are unconstitutional takings of workers’ hard-earned pay.  The fact is, just as raisin farmers may with good reason believe they actually benefit from the very competition that elected bureaucrats seek to curtail, employees may have good reason to believe they benefit from the very competition union bosses seek to stop with restrictive work rules.

Now that the Supreme Court has come to see the absurdity of the AMAA as implemented, perhaps the days of the NLRA and the RLA may also be numbered.