Corporate & Securities Law

Overrule the Slaughterhouse Cases

Should monks be permitted to make and sell caskets without a license from the State of Louisiana? This is essentially the issue in a case now pending in federal district court in Louisiana. The issue is a constitutional one — does the Fourteenth Amendment protect economic liberties? The Supreme Court, in a series of three cases arising in Louisiana in the 1870s, known as the Slaughter-House Cases, held the answer was “no,” thus allowing the State of Louisiana to create a state monopoly in the slaughtering business and to give that monopoly power to one private firm.

The issue today isn’t one of monopoly, but a state-sponsored cartel in the making and sale of caskets. In Louisiana, only licensed funeral directors can be in this business, and the monks face civil fines and even criminal penalties if they infringe on this state-protected turf of their would-be competitors. To be sure, the legislators can tell stories about public safety and the dangers for consumers from too much competition. But the monks have stories too, and these are much more likely to be true. They are about concentrated interests — the funeral directors — using their influence to protect their profits and keep out new entrants. The story is a simple one of the literature on public choice. The benefits to the funeral directors from lobbying are larger than the individual gains to any individual from increased competition in the market for caskets, and so no individual or group has strong incentives to challenge the state-backed cartel. Politicians take campaign contributions from funeral directors in return for protecting their profits, while telling their constituents that the decision is a matter of safety or protecting them from bogeymen.

But the Institute for Justice, which has an entrepreneurship clinic at the University of Chicago Law School, where I teach, is challenging the law on behalf of the monks (and, indirectly) the people of Louisiana who have been ill-served by their representatives. A video about the controversy is here. The self-described goal of the Institute for Justice is to overrule the Slaughter-House Cases. It would be a delicious bookend to this sad constitutional legacy for a Louisiana case to finally be the death of this terrible precedent.

Full post as published by Truth on the Market on August 13, 2010 (boomark / email).